It’s Monday June 12, 2006, and the Dow gave up over 350 points last week as investors continue to be on the fence as it relates to a potential interest rate hike here in the United States. Global Markets have already shifted, from Europe to Asia, interest rate hikes occurred across the board.
A big factor for the U.S. is this Tuesday as the wholesale price report comes out and this Wednesday as the consumer price index is released. So both traders and economist are waiting for these figures as they will give a better indications as to whether Ben Bernanke will announce a rate hike or not during the June 28-29th Fed Meeting. So stay tuned….
Over the weekend the first storm of the 2006 Atlantic Ocean Hurricane Season, Tropical Storm Alberto, dropped over 18 inches of rain in Western Cuba in a 24-hour period, this forced the evacuation of close to 27,000 people. Now this is important because this is the start of hurricane season and Tropical Storm Alberto is heading to Florida, it was tagged as a depression on Sunday and now it’s tagged as a tropical storm as of this morning. The hurricane season will begin to chime in as it relates to crude oil prices, of course the situation in Iran is a big factor as well. We’ll update you on this situation tomorrow.
The first film that has been released by the Disney (NYSE: DIS) Pixar combo did well this weekend as it raked in over $63 million, but this is shy of the estimates. The street was expecting the film to gross between $70-$80 million at the box office this weekend. We even got wind of estimates of $100 million, which was a bit of a stretch. Now bear in mind that this film will do very well globally in the coming weeks and that is what investors need to look at, of course the first outing is important but it will not show you the true value of the Disney-Pixar combo. You may see a slight downturn in Disney today but expect that to be short lived as the street looks down the road and beyond the brick as opposed to looking solely at the weekend box office receipts.
As an investor you need to look at what the companies are currently doing but if you are investing in a company then you are betting that they will do well in the future. So with that in mind you need to look at what companies are doing now and what they could potentially do in the future. A prime example of that is General Motors (NYSE: GM), we’ve been speaking about the “American Icon” for a little bit now and for good reason, the street pounded the stock when the company was on the ropes. As GM began to align the right people and put together the right plan to implement then the street took notice. Now they have been executed their plan piece by piece and they are not even close to being done. Now as an investor had you done your homework or at the very least listened to what we had to say then you would have seen what we saw in the $19 range but it’s far from out of your reach at this point. This is why General Motors is our turnaround spotlight for 2006. We’ve also made one other addition to the “Turnaround Spotlight” and that company is IAC/InterActiveCorp (NASDAQ: IACI).
We spoke about Zale Corp (NYSE: ZLC) on Friday as they received a bump up by Goldman Sachs, and it looks like it was for good reason as Signet Group PLC (NYSE: SIG), the specialty jeweler retail store is said Sonus Complete to be in talks with Zale for a potential merger situation. Now Signet operates over 1200 retail jewelry stores here in the United States under the names Kay Jewelers, and Jared The Galleria Of Jewelry and over 1800 globally while Zale operates over 1400 retail jewelry stores here in the U.S. The combination of the two should make them the largest jewelry retailer in the country.
The stock options probe continues as more companies are thrown into the mix, the latest companies to be targeted by informal inquiries by the SEC include Broadcom (NASDAQ: BRCM) and Intuit, Inc (NASDAQ: INTU). They join the likes of UnitedHealth (NASDAQ: UNH) and Power Integrations (NASDAQ: POWI) in a probe that seems to be more of a witch hunt of sorts than random inquiries. Now at least the companies that were initially targeted are not alone in the investigation that in some cases have went to the U.S. Attorneys officer of both New York and California.
Lets talk about cell phones for a minute, both Nokia (NYSE: NOK) Motorola (NYSE: MOT) may begin to feel the pinch of over saturation in the mobile phone market. Texas Instruments (NYSE: TXN) even though they showed good numbers gave a lower outlook for future quarters, they make chips for cell phones. Even though there are more cell phones sold in the United States than computers, that pace is sure to slow down. Motorola however did unveil a new phone to compete with both Research in Motions (NASDAQ: RIMM) Blackberry and Palm’s (NASDAQ: PALM) Treo, this may not be enough to put them over the top but they are in better shape than Nokia who just lost their CEO that helped to bring real value to the company during his tenure.