Why stocks are in for a rough ride this week
Stocks in for a rough ride this week

Longtime market bull Jeremy Siegel says investors could realize the market is behind the curve on interest rates.

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Now that the satellite TV provider has won the fire-sale auction for bankrupt Blockbuster, an online movie catalog could be in the works.

By InvestorPlace Apr 6, 2011 8:48AM

investorplace logoImage: Movies (© Comstock/SuperStock)Ask subscribers to Dish Network (DISH) why they choose the satellite television provider, and the most common answer is likely to be cost. Dish is cheaper than major cable providers like Comcast (CMCSA) and satellite rival DirecTV (DTV), starting at just $24.99 a month.


But things might not continue to be so simple now. Dish announced early Wednesday that it has bought the defunct library of the one-time movie-rental powerhouse Blockbuster for $320 million at auction, a deal that could present another big reason consumers will buy into Dish: a digital library of movies they can access over the Internet, akin to Netflix.


The purchase of Blockbuster is an important strategic shift for Dish. It means the company is flexing its muscle in an attempt to become a major player.


But more importantly for consumers, it may mean more viewing options and competitive pricing for consumers. Blockbuster's online content library could give Dish Network an opportunity to create an online product to supplement the viewing experience akin to Netflix's offering mail-order DVDs alongside streaming content.

 

It’s hard to see how an increase in interest rates without a speed-up in the appreciation of the yuan will slow inflation in China.

By Jim J. Jubak Apr 5, 2011 6:18PM
Jim JubakSurprise! Just when most analysts had convinced themselves that China was done raising interest rates for a while, the People’s Bank of China increased its benchmark lending rate, effective April 6, from 6.06% to 6.31%.

The bank’s one-year deposit rate will go to 3.25%, from 3%. (Of course, with inflation running near a 5% annual rate, keeping money in the bank even at the new rate is a losing proposition.)

The interest-rate increase is the sixth by the People’s Bank since the end of the global financial crisis, and its fourth since October.

The timing of the rate increase suggests bad news to come in the March inflation numbers due to be released on April 15. The consensus among economists is that inflation increased to a 5.1% annual rate in March from 4.9% in February and January. The 5.1% would match November’s 5.1%, a 28-month high.
 

Insurers could see less revenue as more parents delay their teenagers' driving. But if accidents are also down, it could mean more profits, too.

By Kim Peterson Apr 5, 2011 1:33PM
Image: Woman with license (© Blend Images/SuperStock/SuperStock)There are fewer teen drivers on the road these days, and while that may be great for other drivers, it's not so hot for insurance companies.

So many parents are keeping their kids away from the wheel, in fact, that Nationwide Mutual Insurance is warning that it may see its premium revenue fall as a result. A Nationwide survey found that almost a third of parents were concerned about the added costs of allowing a teen to drive. One in seven parents said they would hold off allowing their children to drive.

How expensive is it? Nationwide says households shell out an extra $3,100 each year to allow teens to drive. Gas prices are soaring, and everything else seems to be getting more expensive as well.

Auto insurance for a teenager is through the roof. One industry trade group said adding a teen to an insurance policy can increase premiums by as much as 100%, Bloomberg reported. About a third of the parents who do allow their teens to drive have cut back on dining, entertainment and other expenses just to pay the added costs, Nationwide says. 

Missing the annual June iPhone launch will put pressure on Apple shares as the Android rivalry heats up.

By TheStreet Staff Apr 5, 2011 12:56PM

By Scott Moritz, TheStreet

 

Apple's (AAPL) iPhone 5 delay could stretch to fall.

 

"This year's iPhone launch is likely to be later, towards the August/September timeframe," Barclay's Capital analyst Ben Reitzes wrote in a research note Tuesday.

 

Concerns about Apple's iPhone 5 missing at the traditional June launch as well as a rebalancing move in the Nasdaq-100 index have been a knock on Apple shares recently.

 

Critics of the famed investor and his company have plenty to say after a deputy is caught up in questions of insider trading. With video.

By Kim Peterson Apr 5, 2011 12:29PM
Let the Warren Buffett bashing begin! One of his top deputies plays a little fast and loose with what may be insider trading, and the Buffett critics begin sharpening their knives.

Enter Michael Steinhardt, the chairman of WisdomTree Investments, a company that manages about $10.1 billion in exchange-traded funds. Steinhardt had plenty to say about Buffett on CNBC Tuesday, calling him the "greatest PR person of recent times," one that has "managed to achieve a snow job that has conned virtually everyone in the press."

Steinhardt goes on to say that Buffett snookered everyone with his decision to give away billions of his personal fortune to philanthropy. Buffett didn't donate any money in the first 70 years of his life, Steinhardt says. 

The fund has become increasingly disjointed from its underlying index, so just watch it from the sidelines for now.

By TheStreet Staff Apr 5, 2011 11:23AM

By Don Dion, TheStreet

 

In view of rising oil prices and souring sentiment toward nuclear energy, natural gas is back in the spotlight, driving investors into ETFs and exchange-traded notes targeting the attractive fuel source.

 

The sudden spurt of popularity has created an alarming, albeit interesting, scenario for one of these products, the futures-based iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ).

 

As investors have poured into the product, GAZ has become increasingly disjointed from its underlying index. This has resulted in the development of a substantial premium that stood at nearly 18% as of April 1.

 

This shipping company is packing on the dividends.

By Motley Fool Pick of the Day Apr 5, 2011 11:22AM

By Jim Royal

 

My Special Situations portfolio is focused on transactional events that create advantageous stock mispricings. Often, special situations create value through their structural complexity or through a lag in financial reporting that typically follows any change. One of those transactional events is a company starting to pay a once-slashed dividend. For my latest buy recommendation, that company is Seaspan (SSW).

 

The company is poised to massively increase its dividend as it finishes building out its container ship fleet, and it's already shown signs of the dividend increases, with a recent promise to hike the payout by 50% for the year, to $0.75 per share, following last year's climb of 25%. Moreover, the company has promised a "progressive dividend policy," indicating that it will substantially raise its dividend as earnings ramp. That's a policy that BP (BP) has undertaken as it brings its dividend back up after a few quarters of no payout.

 

Analysts say shares of the search giant are undervalued, given its track record and growth prospects.

By TheStreet Staff Apr 5, 2011 11:09AM

By Jake Lynch, TheStreet

 

Google (GOOG), once a favored growth stock, now trades at a discount relative to peers, despite its steady expansion.

 

The Internet search stalwart dominates the Web and offers international exposure. It also has an ample balance sheet, with nearly $32 billion of net cash. Most U.S. investors are familiar with Google's business model, its iconic co-founders Larry Page and Sergey Brin, and its penchant for innovation. However, few appreciate the company's overseas growth potential.

 

Google stock has risen 3.3% during the past 12 months even as sales have advanced 23% and earnings 30%. Similarly, in three years, Google's stock has delivered an annualized return of 8.3%, lagging sales growth of 21% and profit gains of 26%. Google's trailing price-to-earnings ratio, at 23, represents a 30% discount to its five-year average multiple.

 

Big portfolio managers appear to be positioning themselves for the end of QE2 by rotating into high-yield, slow-growth sectors.

By Jim Cramer Apr 5, 2011 10:33AM

jim cramerthe streetIs the rotation into health care stocks for real? We've had the health care service providers and medical device companies going up for months now, including WellPoint (WLP), Humana (HUM), Allscripts (MDRX) and Cerner (CERN).

 

Few groups have been as strong as the distributors McKesson (MCK) and AmerisourceBergen (ABC). AmerisourceBergen's target was bumped Monday by UBS. Davita's (DVA) price target was upped by Goldman Sachs. St. Jude Medical (STJ) and Edwards Lifesciences (EW) have been incredibly strong stocks. So has device maker C.R. Bard (BCR).

 

Takeover bids for Genzyme (GENZ) and now Cephalon (CEPH) have kept the biotechs percolating.

 

Now it looks like the old-line drug companies -- which I, among other investors, have written off -- may be catching a bid. Pfizer (PFE) helped the cause by selling one of its divisions, Capsugel, to KKR (KKR). (I am sure we will see a big equity offering within 18 months from that one, creating huge profits for KKR. How predictable is that?) Any breakup of Pfizer will be well received. Bristol-Myers (BMY) announced a breakthrough drug last week. Johnson & Johnson (JNJ) will not go down no matter how many recalls it has. And Abbott Laboratories (ABT) looks like it is breaking out on the charts.

 

A tentative plan for California would bring fresh foods and other items to customers' doorsteps.

By InvestorPlace Apr 5, 2011 9:06AM

investorplace logo investor placeImage: Groceries (© Jeffrey Hamilton/Getty Images/Getty Images)Wal-Mart Stores Inc. (WMT) is the world's largest retailer and has  become a heavyweight in all corners of the market. Electronics? Check. Food? Check. Home furnishings? Check.


This wide reach and variety of products are part of the reason for sprawling supercenters that offer everything under one gigantic roof. But people with sore feet, take heart: The next category the king of retail wants to dominate may actually cut the mileage on your shopping cart.


That business is home grocery delivery, which Wal-Mart may soon test via online sales in California. And after that, it may be coming to a store near you.


Obviously, the motivation is profits. The fresh grocery delivery service, internally referred to as Project Titan, according to Bloomberg and not finalized by management, would be a serious e-commerce push for Wal-Mart. As more consumers take to the Web, filling the coffers of Amazon.com (AMZN) and other online retailers, the brick-and-mortar model of WMT is threatened in the long term.

 

4 orders have submitted a challenge over the way the bank pays its executives. With video.

By Kim Peterson Apr 4, 2011 4:16PM
You've really hit a low point when you get called out by nuns. That's what's happening to Goldman Sachs (GS), a company that, coincidentally, describes itself as doing God's work.

Four orders are all investors in Goldman Sachs and have sent the bank a formal challenge over the excessive ways the bank compensates employees, The Guardian reports. Goldman's top five employees received $69.5 million last year.

The nuns -- Sisters of Saint Joseph of Boston, Sisters of Notre Dame de Namur, Sisters of St. Francis of Philadelphia and the Benedictine Sisters of Mt. Angel -- have asked that shareholders demand the board review the company's executive compensation policies. They also want a report of that review by October.

Post continues after this video about Goldman Sachs executives cashing in: 

The company bids $900 million for a host of patents held by Nortel. That's what you have to do to compete. With video updates.

By Kim Peterson Apr 4, 2011 3:56PM
There's a sad reality in the mobile world: It's a convoluted mess of patents, lawyers, trademark fights and lawsuits. There are too many patents covering too many niches -- and you better grab what you can if you want to compete.

That's why Google (GOOG) has bid $900 million to buy all 6,000 of Nortel's remaining patents. Nortel, at one time a telecom industry leader, is in bankruptcy court and plans to auction off the patents. Its broad patent portfolio covers computer science, wireless, Internet search and social networking technologies, according to The Wall Street Journal.

Google becomes the "stalking horse" in this June auction, which makes its bid the minimum. Others who want to join in the bidding must go higher.

Post continues after this video about Google's massive bid: 

Prosecutors argued that the privately produced coins were too similar to legal US currency.

By Kim Peterson Apr 4, 2011 2:08PM
Credit: © Alan Marler/AP
Caption: Kevin Innes, regional currency officer for Liberty Dollars, holds a group of Liberty Dollar notesIt's perfectly fine to issue private currency in the United States, and that currency can be bartered, exchanged or used as payment in transactions. Entire communities have experimented with private currency, and several businesses in Detroit began accepting new Detroit Cheers bills instead of official money in 2009.

But when your private currency starts to resemble real money, federal prosecutors get very interested. And when your currency looks and feels like a real coin and says "Twenty Dollars" and "$20" on it, that's when the feds take action.

The maker of silver Liberty Dollars, Bernard von NotHaus, 67, was convicted last month for making and selling the private currency in the form of notes and coins, The Associated Press reports. And now the government wants to seize his stash of five tons of the silver dollars and precious metals, estimated at $7 million. 

While US stocks remain attractive, these international funds should outhustle the S&P 500 over the next 3 months.

By TheStreet Staff Apr 4, 2011 1:32PM

Image: Earth encircled by money (© Bob Jacobson/Corbis)By Gary Gordon, TheStreet

 

The S&P 500 ($INX) garnered as much as 5.4% in the first three months of 2011. What might we expect for the next quarter?

 

Other than Jim Cramer, most would likely concede that the April-June period could be a bit tougher for U.S. stocks. "Almanac traders" would point to 100 years of data on second-quarter underperformance. "Inflation fighters" would chronicle the directionality of core and noncore consumer prices. Meanwhile, "monetary policy monitors" would discuss the anticipated conclusion of quantitative easing and the probable rise in treasury yields.

 

It's not that U.S. stocks look unattractive. On the contrary, U.S. mega-corporations present attractive valuations at 12 to 14 times forward earnings. Yet earnings growth may be simmering down, as not every company can pass along increasing input costs for the products and services being sold.

 

Recent gains suggest investors have come back to this once-favorite emerging market.

By TheStreet Staff Apr 4, 2011 12:43PM

By Don Dion, TheStreet

 

Exchange-traded funds tracking Brazil got a lift last week. A rally in emerging-market shares benefited many, but iShares MSCI Brazil (EWZ) gained more than 5%. The rally was also particularly kind to Market Vectors Brazil Small-Cap (BRF), which popped almost 9%.

 

This sudden jump suggests investors have come back to this once-favorite emerging market. Although shares have performed well over the past couple of years, 2010 was a year for leadership by the smaller Southeast Asian markets of Indonesia, Thailand, Malaysia and Taiwan. Among the BRIC nations, Russia and India were the stronger performers, while China and Brazil lagged.

 

Brazil's underperformance left shares relatively cheap compared with the emerging-market index. Midway through 2010, Brazilian shares traded at a premium to the broader index but now trade at a discount of several percentage points -- and as much as 10% at one point. Not spectacularly cheap but enough that some institutional investors are increasing their allocations to the country.

 

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[BRIEFING.COM] The major averages ended the midweek session with slim gains after showing some intraday volatility in reaction to the release of the latest policy directive from the Federal Open Market Committee. The S&P 500 added 0.1%, while the relative strength among small caps sent the Russell 2000 higher by 0.3%.

Equities spent the first half of the session near their flat lines as participants stuck to the sidelines ahead of the FOMC statement, which conveyed no changes to the ... More


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