PPI UP WHOPPING 2.0% IN NOVEMBER

The Producer Price Index experienced a 2.0% gain in November, the biggest monthly advance since 1974. PPI is a measure of wholesale prices. Core PPI, which excludes energy and food, rose 1.3%, the biggest increase since 1980. The big jump in PPI caught economists and experts by surprise as the consensus estimate was for a 0.5% increase.

According to Kirk Shinkle of Investor's Business Daily, investors should not be overly concerned with the big jump as the majority of the increase in prices was due to volatility in the auto sector. Wholesale car prices rose 2.2%, while light truck prices jumped 13.7%.

Bureau of Labor Statistics

ILLINOIS RAISES MINIMUM WAGE

Governor Rod Blagojevich signed a minimum wage increase into law that will raise minimum wage to $7.50 per hour starting July 1, 2007. The minimum wage will then be increased three times by one quarter each, growing to $8.25 per hour in 2010. Democrats have pledged to increase the federal minimum wage next year. Currently, 29 states have minimum wage laws that require payment of more than the federally mandated $5.15 per hour.

International Herald Tribune

UNUSED GIFT CARDS = BIG PROFIT

Best Buy earned $43 million in fiscal 2006 from gift cards that have not been used for two or more years. Limited Brands reported $30 million in revenue in 2005 from the unused cards. Consumer Reports estimates that 19% of gift cards go unused. Keane Co. has a lower estimate of about 6%, or $4.8 billion.

AP at Yahoo!

NYC BOARD BANS TRANS FATS AT RESTAURANTS

The Board of Health in New York City voted unanimously to ban artery-clogging trans fats at restaurants. The ban will go into effect in July of 2007, at first eliminating trans fats only from cooking oils, then in July of 2008 the full ban eliminating trans fats from all foods will begin. From the AP article at Yahoo!:

Mayor Michael Bloomberg, who banned smoking in bars and restaurants during his first term, has dismissed cries that New York is crossing a line by trying to legislate diets.

"Nobody wants to take away your french fries and hamburgers — I love those things, too," he said recently. "But if you can make them with something that is less damaging to your health, we should do that."

Chicago is also considering its own trans fat law, which wouldn't ban the fats outright but would severely restrict the amount that kitchens can use. The measure would apply only to large restaurants, defined as those that make more than $20 million in sales per year.

Here is a pie chart from the U.S. Food and Drug Administration that shows the major sources of trans fat for American adults:

COMPETITION FOR CABLE AND SATELLITE TV?

Before satellite TV, most cable companies enjoyed a monopoly, typically regulated by the municipality in which they operated. As such, cable providers were guaranteed a "reasonable" profit, but without competition, prices climbed steadily over the years.

When satellite TV entered the picture, most believed that the competition would be good for consumers and that increases in prices for cable would slow. That has not been the case. In fact, cable and satellite TV providers have settled into a cozy duopoly, not so much competing as coexisting without much competition.

Prices for cable TV between 1995 and 2005 shot up 93%. In municipalities with only satellite and one cable provider, the average price for cable was $43.34 per month. In municipalities where there was more than one cable provider, the average price was $35.94, demonstrating that the increased competition was good for consumers.

The FCC wants to increase competition nationwide by adopting new rules that would make it easier for phone companies to compete directly with cable TV companies. Verizon already provides TV service in 300 municipalities, while AT&T does so in 24.

The problem in rolling out TV service via phone lines has been the requirement for the phone companies to seek permission and agreements one at a time from local governments. This is time-consuming and inefficient. The U.S. Congress could pass a law eliminating the tedious one-at-a-time agreement requirement, but has failed to do so thus far. Three states - Texas, California, and New Jersey - have passed laws allowing speedy rollout and competition, and their consumers have benefited.

The new FCC proposal would speed things a bit by requiring municipalities to act on applications by phone companies to provide cable TV services within 90 days in most cases, 180 days in the remainder of cases.

As we know, capitalism thrives on competition and the consumer benefits. The sooner new FCC rules or a new law can be passed, the sooner we will all see lower cable and satellite TV bills.

USA Today

NOVEMBER AUTO SALES RESULTS

Here is the list of winners and losers for November U.S. light-vehicle sales (includes light trucks and SUVs). The comparison listed is November of 2006 to November of 2005.

Winners
Acura +24.0% (division of Honda)
Toyota +15.9%
GM +6.1%
DaimlerChrysler +4.7%
Chrysler Group U.S. +2.9%

Losers
Ford -9.7%
Honda -3.0% (Honda brand only)
Nissan -1.6%

This was only the second month ever that Toyota sold more vehicles in the United States than Ford. Toyota sold 196,695 vehicles to Ford's 181,111.

USA Today
WSJ.com
BusinessWeek

MIXED RETAIL SAME-STORE SALES RESULTS FOR NOVEMBER

Retailers have reported mixed same-store sales results for the important pre-holiday shopping month of November. Overall, same-store sales rose 2.1%, the weakest increase since March. Comparisons of same-store sales are made only for stores open more than one year and compare November of 2006 to November of 2005.

Losers
Wal-Mart -0.1%
Ann Taylor -4.3%
Abercrombie & Fitch -5.0%
Gap -8.0%
Pier One Imports -15.3%

Winners
Kohl's +3.7%
Costco +5.0%
Nordstrom +5.4%
Target +5.9%
CVS +8.4%
Federated Department Stores +8.5%
Limited Brands +12.0%

MSN Money
BusinessWeek
MarketWatch
Trading Markets

GDP GROWTH REVISED UPWARD

United States third quarter gross domestic product was revised upward from 1.6% to 2.2% for the July through September period of this year. That is a positive sign, but according to an article in The New York Times, other signs, bulging corporate inventories and the deteriorating housing market, point to a steep decline for the rest of the year and economists believe the slide is not over as the economy cools from hot first quarter growth rate of 5.6%.

SAN DIEGO CITY COUNCIL VOTES TO BAN SUPERCENTERS

The San Diego City Council voted to ban any retail store with more than 90,000 square feet with at least 10% of that space devoted to selling groceries and other merchandise that is not subject to sales tax. The average Wal-Mart Supercenter is 185,000 square feet and sells groceries. The vote was 5-3 for the ban. Mayor Jerry Sanders has vowed to veto the ban, but the City Council can override a veto with five votes.

AP at Yahoo!

NEW HOME SALES FALL, MEDIAN PRICE INCREASES

Sales of new homes fell 3.2% in October, after increasing the previous two months, according to the Commerce Department. Over the past year, sales have fallen 25.4%. The median price for a new home rose 1.9% from October 2005, the biggest increase since February. In October, there were 558,000 new homes for sale, a seven-month supply.

Forbes

MIXED RESULTS FOR EXISTING HOME SALES

The National Association of Realtors by 0.5% in October, the first increase since February, as buyers were lured by falling prices, the third consecutive monthly price drop. The median price for all existing homes fell 3.5% when compared to October of 2005, the largest decrease since the NAR began keeping records in 1968. This is also the first time that existing prices have fallen for three consecutive months.

Prices in the South fell the furthest, dipping 7%. Florida caused a huge drag on the region with a whopping 22% decrease in prices from October 2005.

USA Today
Reuters
WSJ.com
Forbes

ONLINE SALES TRAFFIC INCREASES

The Monday after Thanksgiving, when workers return to their offices and speedy Internet connections, has become a big day for online retailers. Traffic this year was up 19% according to Akamai Technologies, a company that helps other companies send content over the Web. At 1:00 p.m. Central, traffic reached 2,145,558 visitors per minute and was still over 2 million at 8:00 p.m. last night.

The online shopping season has been very good, but some companies were not prepared. Wal-Mart's site was down for at least two hours on Black Friday. Wal-Mart said traffic was up 700% when the servers crashed and the company had only expected a 200% increase. Macy's site was down for an hour the same day, but the company claimed it was due to a bad server, not too much traffic.

USA Today
WSJ.com

FORD RAISING $18 BILLION MORE DEBT, $15 BILLION SECURED

In an effort to raise capital to help finance a turnaround of its North American operations, Ford Motor Company will be taking on another $18 billion of debt, $15 billion of which will be secured by core automotive assets. Ford will be pledging nearly all of the company's North American automotive assets as collateral, marking the first time in its 103-year history that such a move has been made and underscoring the severity and seriousness of the problems Ford is facing. The announcement of the move caused the three main credit rating agencies to slash Ford's existing debt further into junk, or non-investment grade, status.

SmartMoney
WSJ.com
Reuters

WAL-MART GAINS ACCESS TO INDIA THROUGH JOINT VENTURE

Wal-mart has signed a pact with Bharti Enterprises Ltd. to create a 50:50 joint venture aiming to open retail stores in the rapidly growing Indian market. In India, foreign companies are not allowed to open retail stores that stock more than one brand, so Wal-Mart will handle the technology, logistics, and wholesale operation, while Bharti runs the retail stores using a franchisee model. Bharti is exploring the possibility of opening hypermarkets (giant retail stores that sell consumer goods and food), supermarkets, and even smaller stores to gain a piece of the $300 billion Indian retail sector. The goal is to have the first store open in August of 2007.

The Times of India
WSJ.com

TRAFFIC DOWN, SALES UP OVER HOLIDAY SHOPPING WEEKEND

The National Retail Foundation estimates that 140 million shoppers hit stores over the "Black Friday Weekend" this year, 5 million fewer than 2005, but the average shopper spent $360.15, up 18.9% over last year. Here are some interesting stats:

• High-ticket electronics sales were the likely reason for the overall 18.9% spending increase this year. 39.5% of men and 27.5% of women bought consumer electronics or computer-related accessories.
• Men outspent women by 38.1% per shopper.
• 49.2% of the men surveyed purchased books, CDs, DVDs, videos or video games compared to only 34.1% of women.
• The most popular item category purchased was clothing or clothing accessories, and books, CDs, DVDs, videos or video games, with 41.4% of shoppers making a purchase from either category.
• As of Sunday, November 26, the average person has completed 35.6% of their holiday shopping, showing no change from last year.
• Only 8.6% of consumers have finished their holiday shopping.

The NRF estimates that overall holiday sales for 2006 will be up 5% over 2005.

The National Retail Foundation Black Friday Weekend Survey
Reuters
WSJ.com

WAL-MART PREDICTS SAME-STORE SALES DECLINE FOR NOVEMBER

After lowering expectations for November in late October with an estimate of flat same-store sales, Wal-Mart Stores Inc. reported Saturday that a same-store sales decline of 0.1% for November is likely. Same-store sales measure sales at retail locations open more than one year (comparing November 2006 to November 2005) and are a favorite Wall Street metric. The company will release an official detailed breakdown of sales on Thursday, November 30.

If sales do decline, either the company's Sam's Club or flagship Wal-Mart Stores will have experienced a decrease in same-store sales. If there is a decline in sales at Wal-Mart Stores, the traditional U.S. Wal-Mart retail stores, it will be the first since the company began reporting sales data in 1979.

Wal-Mart has struggled to produce good results in same-store sales this year and November could prove troubling as the company slashed prices on electronics and toys earlier and much deeper than usual. For example, a 42" Panasonic plasma television that retailed for around $1,700-$1,800 at Wal-Mart was cut to $1,294 on November 3. A similar Panasonic television sold for $1,708.99 on Best Buy's Web site the same day. In addition, the company has now rolled out its highly publicized $4 generic prescription plan in 38 states in an effort to lure customers in to the stores to purchase other items. Yet, despite these efforts, it appears as though Wal-Mart sales are heading south.

WSJ.com
Reuters
Wal-Mart Press Release

SONY LOSING $240 PER PLAYSTATION 3

After taking apart one of the devices, iSuppli Corporation estimates that Sony is losing approximately $240 on every sale of the new Playstation 3 video game console. This figure will lower as time passes and the bleeding-edge technologies the company used become more commonplace and reasonably priced, as happened with the Microsoft Xbox 360. When the Xbox 360 was released, Microsoft was thought to lose $150 per console, now iSuppli estimates the company makes $75 per unit on sales of the Platinum System.

WSJ.com

AN EXAMPLE OF STOCK OPTIONS SCANDAL

I've intentionally avoided posting about the stock options dating scandal that has erupted due to the difficulty of explaining it properly in a short post. I'm still not able to explain it in a short post, but if you check out the USA Today links below, you will see an example of how executives at a medical device company made a questionable $50 million with oddly-timed stock options.

USA Today Special Report - Pay special attention to the interactive chart at the top of the article.
USA Today Article - Details how a former U.S. congressman and current Cyberonics board chairman received below-market stock options three years before joining the board. This smacks of scandal, on top of the scandal the company has recently been through.

LONDON STOCK EXCHANGE REJECTS NASDAQ OFFER

Nasdaq Stock Market Inc. made a $5.1 billion offer for the London Stock Exchange, but the offer was quickly rejected as inadequate. Nasdaq has accumulated 28.5% of shares of the LSE. Nasdaq and NYSE Group are locked in a race to create the first trans-Atlantic exchange.

Reuters

CRUDE OIL SETTLES BELOW $56

Light sweet crude for December delivery settled and closed at $55.81 on the New York Mercantile Exchange Friday, the lowest settling price since June of 2005. January crude, which becomes the front-month contract on Monday, settled at $58.97.

From USA Today:

Analysts said the unusually wide spread between the December and January contracts signals buyers' comfort with the near-term supply fundamentals but concern about the heart of winter, when heating demand typically peaks.

If the weather remains mild, "we're looking at a supply glut," said James Cordier, president of Tampa-based Liberty Trading. Cordier, who views the OPEC cuts as bearish for prices because it signals weakening demand, believes Nymex crude futures are headed toward $52 this winter.

ECONOMIST MILTON FRIEDMAN DIES

Influential free-market economist Milton Friedman died Thursday at the age of 94. Friedman, who won the Nobel Prize for economics in 1976, wrote extensively about the importance of free enterprise and free markets.

Milton Friedman, The Social Responsibility of Business is to Increase its Profits
Reuters

AIRLINE CONSOLIDATION POSSIBLE

With US Airways Group hostile $8.67 billion takeover bid for Delta Air Lines yesterday, the long-predicted consolidation in the airline industry may have started. Rumors are swirling, with some saying United might make a bid for Continental, and American is rumored to be interested in Northwest. Talk of such consolidation pushed airline stocks higher Wednesday with American and Continental hitting their highest share prices since September 11, 2001.

WSJ.com

PPI DROPS RECORD-TYING 1.6%

The Bureau of Labor Statistics released the October Producer Price Index Tuesday and it revealed a decline in producer or wholesale prices of 1.6%, easing inflationary concerns a bit, and tying the record drop set in 2001. In another positive sign on the inflation front, Core PPI, which excludes food and energy, declined 0.9%, the biggest drop in 13 years.

Bureau of Labor Statistics
Reuters

PS3 HAS PROBLEMS WITH SOME OLDER GAMES

On Saturday, the day of the Japanese launch of the PlayStation 3, Sony announced that some of the 8,000 games released in Japan for earlier versions of the PlayStation were not playing properly on the PS3. Some problems seem minor, like certain sounds not playing or being replaced by other sounds, but some games will not play at all. While Sony declined to give the number of games impacted, according to Reuters, a Japanese newspaper reported there were 200 titles that did not play correctly with the new system. In the United States, over 16,000 games have been released for play on ealier versions of the PlayStation, and an unknown percentage of those games are expected to have problems on the PS3, as well.

The Sony PlayStation 3 debuted in Japan Saturday and will debut in the United States November 17, while a European launch will have to wait until 2007 due to manufacturing delays. A manufacturing glitch caused Sony to release only approximately 100,000 units in Japan. A shortage of the units is widely expected in the United States before Christmas.

Reuters
WSJ.com

LEAKED TOYOTA REPORT SHOWS AMBITIOUS GOAL

The Wall Street Journal is reporting that it has reviewed a leaked document intended for top Toyota executives which sets a goal of 15% market share by 2010. In 2005, Toyota had 11% market share. The company passed Ford as the number two automaker in 2003 and plans to pass GM by 2010. In 2008, Toyota projects production at 9.8 million vehicles, which surpasses GM's 2005 production of 9.2 million, the second-largest output in GM history. Toyota is expecting tremendous growth from the "BRIC" countries - Brazil, Russia, India, and China.

WSJ.com
AP at Yahoo!

BIG THREE AUTOMAKERS TO MEET WITH PRESIDENT

On Tuesday, the CEOs of GM, Ford, and Chrysler Group will meet with President Bush, Treasury Secretary Henry Paulson, and Director of the National Economic Council Al Hubbard at the White House.

From USA Today:

White House spokesman Tony Snow said Friday that Bush plans to use the meeting to "reaffirm his support for the American auto industry." Snow said Bush also will thank them for their progress on flexible-fuel and hybrid vehicles.

The three topics that will likely dominate the meeting are health care,trade and energy. The automakers also are expected to share concerns about the yen's artificially low value, which helps Japanese firms' profits and hurts U.S. rivals.

MICROSOFT ZUNE TO LAUNCH TUESDAY

The launch of Microsoft's new portable music and video player, Zune, was dampened a bit by luke warm reviews by technology heavyweights from the New York Times and the Wall Street Journal, but a story in the International Herald Tribune shows that the door is open for someone to develop an iPod killer and steal market share from Apple. In a poll of 1,725 randomly chosen owners of digital media players, 58% of iPod users said they planned to purchase a Zune.

CNET News.com
BetaNews.com

RUSSIA GAINS U.S. SUPPORT FOR WTO MEMBERSHIP

Russia, which first applied for membership in the World Trade Organization in 1994, appears poised to gain entry soon. One of the last major hurdles standing in the way was an agreement with the United States, but the two sides reached agreement in principle Friday. With agreements already forged with the European Union, China, and Japan, there is little stopping Russia, the largest economy not already in the WTO, from becoming the 150th member.

The New York Times
Reuters

MINIMUM WAGE INCREASES LIKELY

With the Democrats taking control of the House and Senate at the national level and maintaining control of state government in Illinois, it is quite likely that minimum wage will increase both nationally and in Illinois soon. Yesterday, Governor Rod Blagojevich pledged to follow through on raising the state minimum wage a second time under his leadership, this time to $7.50 per hour, according to the St. Louis Post-Dispatch. Nationally, Democratic leaders have stated that they plan to push for an increase in the federal minimum wage, and since 29 states already have higher state minimum wage laws, it seems likely to pass.

Reuters

DELTA, NORTHWEST HIRE BACK PILOTS, FLIGHT ATTENDANTS

Delta and Northwest Airlines filed for Chapter 11 bankruptcy in September of 2005, after competitors United and US Airways had already entered Chapter 11 bankruptcy protection. Now, things are looking up for Delta and Northwest and they are hiring back some furloughed pilots and flight attendants. Delta announced Thursday that it will recall 1,000 of its 3,800 furloughed flight attendants, after already recalling 300 others. About 400 furloughed Northwest pilots have been offered the opportunity to come back as the airline looks to fill 225 positions. It is expected that many of the pilots will not return as the wages are lower than when they previously flew for the airline and many have found other positions.

USA Today

PERRIGO ACETAMINOPHEN RECALLED

Over-the-counter drug maker Perrigo has recalled 11 million bottles of acetaminophen, the generic form of Tylenol, due to the discovery of small metal fragments in some batches of the 500 mg caplets. Initial estimates put the cost of the recall at $2.9 million.

MarketWatch

ADIDAS DRAGGED DOWN BY REEBOK

Last year, German sporting goods giant Adidas bought Reebok for $3.8 billion to better battle Nike in the United States. The results so far have been disappointing. Orders for Reebok goods fell 16% in the most recent quarter and have caused Adidas stock to be the weakest performer for 2006 for Germany's DAX of top 30 shares. Adidas has cut the earnings outlook for the near future as it announced that it will likely be the second half of 2007 before Reebok sales improve.

Reuters

VERIZON NEAR YOUTUBE DEAL

The Wall Street Journal is reporting that Verizon is in advanced talks with YouTube to offer videos on the V Cast service and a new on-demand TV service Verizon is rolling out nationwide. While details are sketchy, it seems that Verizon might be able to lock up exclusivity for YouTube videos on wireless phones, at least for a period of time.

WSJ.com
Reuters

MICROSOFT ANNOUNCES XBOX 360 VIDEO DOWNLOAD OFFERINGS

Starting on November 22, Xbox 360 users will be able to download popular movies and television shows. The movies will be rented from Microsoft partners like Warner Bros. and Paramount, while TV shows from MTV Networks, CBS, and Turner Broadcasting will be owned by the purchaser. Microsoft claims there will be thousands of hours of programming available by the end of the year.

Engadget - pics and story
Reuters
Gizmodo - pic of 70GB Xbox 360 drive
Xbox.com

NTP SUES PALM

NTP, an intellectual property company that holds many patents, has sued Palm Inc. claiming that the maker of the popular Treo and other handheld computer and communication devices violated an NTP patent that covers delivery of email to handheld devices. A similar lawsuit against BlackBerry maker Research In Motion led to a $612.5 million settlement in March of this year.

MarketWatch

GASOLINE HITS NEW LOW

The national retail average price per gallon of gasoline in the United States is $2.198, which is the lowest price in 2006. The average price in August of this year was $3.036, and one year ago gas cost $2.4257. OPEC President Edmund Daukoru said today that another oil production cut may be needed and will be considered when the cartel meets in December.

USA Today

GOOGLE BROKERING NEWSPAPER ADS

Google is running a pilot with 100 customers allowing them to buy ads in newspapers through Google's ad brokering service. Google intends to eventually allow customers to buy radio, television, newspaper, and magazine ads through the service, creating efficiency, and giving Google another revenue source. Last year, Google bought ads in magazines and used an auction process to resell the ads, which did not go well. The newspaper pilot will be different in that Google will not be buying the ads before customers demand them and they will not be using an auction to sell the ads.

Reuters
WSJ.com

WAL-MART BEGINS AGGRESSIVE DISCOUNTING

In an effort to combat slowing growth in same-store sales and improve upon the company's own expectation of flat sales in November, Wal-Mart began aggressively discounting electronics on Friday. The company lowered the price on almost 100 electronics items, including plasma televisions, digital cameras, and mobile phones. The price on a Panasonic 42" plasma television was cut by $500, making it $1,294 at Wal-Mart. A similar Panasonic model was offered at Best Buy's Web site for $1,708.99.

Reuters

OCTOBER RETAIL SALES RESULTS

Here are the results for October same-store sales from some key retailers:

Wal-Mart +0.5% (+0.3% Wal-Mart Stores, +2.0% Sam's Club)
Target +3.9%
Saks +9.2%
Nordstrom +10.7%
Federated +7.7% (Macy's, Bloomingdale's)
J.C. Penney +8.1%
Limited Brands +9.0%
Gap -7.0%
Pier 1 -13.7%
Pacific Sunwear -7.1%
American Eagle +8.0%

Overall, retail same-store sales for October were estimated to be up 3.0%, and excluding Wal-Mart, Jharonne Martis of Thomson Financial in New York pegged the increase at a very healthy 4.9%, according to the Los Angeles Times.

AP at Yahoo!

UNEMPLOYMENT RATE AT 4.4%

The U.S. unemployment rate was reported at 4.4%, the lowest its been since May of 2001. Glen Somerville of Reuters points out that this has caused many investors to bet against Federal Reserve rate cuts any time soon.

SALES PROBLEMS FOR WAL-MART

Wal-Mart Stores Inc. reported a paltry 0.5% same-store sales increase for October and issued guidance for sales that indicate an expectation of flat same-store sales in the important pre-holiday month of November. Same-store sales measure sales at stores open more than one year and are considered a barometer of retailer strength or weakness. The 0.5% increase for October is the lowest report for the retail giant in two years and comes amid other retailers reporting healthy same-store sales increases. Warehouse giant Costco reported a 4% increase for October.

Reuters - Wal-Mart
Reuters - Costco
Reuters - General Retail Sales for October

NYSE CLOSING A TRADING FLOOR

The New York Stock Exchange announced plans this morning to close one of its trading rooms, the New Room, a trading floor with about 10,000 square feet of space, which will reduce the floor trading space by 20%. The move is intended to cut costs as more trading is being conducted via computers.

From WSJ.com:

"The decision by NYSE Chief Executive John A. Thain, comes as the exchange removes restrictions on electronic trading on its floor and as more business migrates to electronic systems like NYSE's Arca platform and Nasdaq Stock Market Inc., an electronic exchange that has been stealing market share from the NYSE recently."

"The stock-trading business has been under pressure in recent years to remove the human middlemen with computer servers that match buyers and sellers for less money and at a much quicker clip."

UAL POSTS $190 MILLION PROFIT

UAL Corp., parent of United Airlines, reported a $190 million net income for the third-quarter, putting together back-to-back profitable quarters for the first time in over six years. The company entered bankruptcy in in late 2002 and emerged in February of 2006. Some positive signs for UAL include being profitable despite high fuel prices, which caused an 8% increase in operating costs, and passenger revenue increased 10% on United's Atlantic flights despite the London terrorism scare in August.

WSJ.com

CIRCULATION DOWN AT MAJOR NEWSPAPERS

According to data released Monday, circulation for most major newspapers was down over the past six months. Average daily circulation at 770 papers was down 2.8%, while circulation for 619 Sunday papers was off 3.4%. Many of the nation's biggest newspapers experienced serious declines. The Boston Globe was down 6.7% Monday through Friday and nearly 10% on Sunday. The Los Angeles Times was down 8% Monday through Friday and 6% on Sunday.

The New York Times

CORE PCE EASES

The core personal consumption expenditures, a favorite inflationary measure of the Federal Reserve that excludes food and energy, rose by 0.2% in September. This gives the year previous a 2.4% core PCE, down slightly from August's 2.5%, but still considerably higher than the preferred top end of 2%. With the high, but easing core PCE, and the slow GDP growth, many observers believe the Fed will sit on the sidelines, not changing interest rates until it becomes more clear which is of greater concern - inflation or economic growth.

WSJ.com

KFC TO DROP TRANS-FAT COOKING OIL

KFC announced that it will stop frying items in trans-fat cooking oil in all United States and Canadian restaurants by the end of April of 2007. KFC operates over 5,500 U.S. outlets and 786 in Canada. KFC already uses no trans-fat cooking oil in many countries, including China.

Reuters

TOYOTA TO BUILD TWO NEW NORTH AMERICAN FACTORIES

A Japanese newspaper reported today that Toyota will build two new factories in the North America. The report speculates that the first plant will be operational in 2009, be located in the United States, and produces the popular Yaris model. The second plant will come on line in 2010 and produce sport utility vehicles.

Reuters

U.S. GDP ADVANCES MEAGER 1.6%

The Bureau of Economic Analysis of the Department of Commerce released an advanced estimate of real GDP for the third quarter of 2006 showing an increase of 1.6%. The GDP grew at 2.6% in the second quarter. The 1.6% growth was the slowest in three years.

Bureau of Economic Analysis

MICROSOFT ANNOUNCES VISTA UPGRADE PROGRAM

This week, Microsoft introduced the Vista upgrade program, intended to make consumers comfortable with purchasing computers during the holiday season and upgrading to the new Vista operating system when it is released in late January. Some retailers will chip in and make the upgrade free, while consumers who purchase from certain vendors will simply receive a coupon for a discounted upgrade. You can find details about the program at PC World.

CRUDE OIL PRICES FALL BELOW $61

The Louisiana Offshore Oil Port reopened after closing due to bad weather and that seems to have forced oil prices downward. As of 5:00 a.m. Friday, light-sweet crude is trading at $60.10 per barrel. While the oil port was closed, 3.3 million barrels of oil could not be offloaded, causing a temporary reduction in oil inventories and a spike in price to over $61.

Reuters

MICROSOFT POSTS SOLID Q1 NET INCOME

Microsoft reported a first quarter net income of $3.48 billion, or 35 cents per share, versus $3.14 billion, or 29 cents per share, a year ago. Revenue from server and database products increased 17%, showing strong sales growth in both Windows Server 2003 and SQL Server 2005. Office 2007 and Windows Vista are set for corporate launch this quarter and will be released to consumers next quarter.

"The server business has been going gangbusters for this company for several years now,'' said Charles Di Bona, an analyst with Sanford C. Bernstein in San Francisco. He rates the shares "outperform'' and said he doesn't own them. "It's a hidden gem. It's a real growth engine for the company.''

Bloomberg

MERCEDES UP, CHRYSLER DOWN

DaimlerChrysler posted quarterly net income of $679 million, down from $1.07 billion a year ago. Chrysler posted a $1.46 billion operating loss, while Mercedes operating profit soared to $1.24 billion from $547 million. Rumors have started circulating that parent DaimlerChrysler may be ready to sell ailing Chrysler.

Reuters
WSJ.com

GM POSTS SMALL NET LOSS

General Motors reported a net loss of $115 million for the quarter, or 20 cents per share, much better than the same quarter last year when the auto maker lost $1.66 billion, or $2.94 per share. In another positive sign, GM had a U.S. market share of 25.1% for the quarter, its best result this year.

Reuters

WRIGLEY NAMES CEO OUTSIDE OF THE FAMILY

William Wrigley Jr. Company, the popular chewing gum manufacturer, named William Perez, former Nike CEO, as the first non-family Wrigley CEO in the history of the company. Wrigley shares surged over 15% on the surprising news.

Reuters

IBM SUES AMAZON

IBM sued Amazon yesterday claiming that the online seller is infringing on five IBM e-commerce patents. IBM appears to be interested in seeking a licensing agreement for the patents and avoiding a lengthy court battle.

Reuters

EX-ENRON CEO GETS 24 YEARS IN PRISON

Jeffrey Skilling was sentenced to 24 years in prison yesterday for his part in a financial fraud that destroyed Houston-based Enron. Skilling was also ordered to pay $45 in restitution to Enron investors.

Reuters

FORD POSTS HUGE LOSS

Ford Motor Company reported a $5.8 billion quarterly loss today, its largest in 14 years.

Reuters

OPEC OIL PRODUCTION CUT INEFFECTIVE

Traders do not seem to believe that members of OPEC will truly cut production by 4%, as agreed upon October 19. According to Saturday's Washington Post, oil closed Friday below $57 per barrel for the first time in 2006. While it is in OPEC members best long-term interests to cut production, the short-term incentive of producing and selling as much as possible at high prices is too tempting to pass up. This leads to increasing supply and inventories, and lower prices result in the short-term and long-term markets.

For an interesting piece on the possible irrelevance, or at least ineffectiveness, of OPEC, check out this Street.com article by Christopher Edmonds.

APPLE SHINES IN EARNINGS REPORT

Apple Computers Inc. posted a 27% increase in net income in the fourth quarter as sales of iPods and Macintosh computers surged. Apple sold 8.7 million iPods compared to 6.5 million in the fourth quarter of last year. The company also sold 1.6 million Macs for $2.21 billion, a record for quarterly sales. Shares surged 6% in after-hours trading.

WSJ.com

MATTEL NET INCOME INCREASES 6.1%

Toy maker Mattel posted positive quarterly results as sales of TMX Elmo, Barbie, and Cars toys all sold well. According to WSJ.com, TMX Elmo, the 10th-anniversary edition of the popular Sesame Street character, "is the single biggest pre-ship launch before the holidays in Mattel's history. The toy has created a buzz in the wider toy industry and is leading to earlier holiday shopping. It is also becoming the hardest toy to find this season."

WSJ.com

WAL-MART TO ACQUIRE CHINESE HYPERMARKET CHAIN

Wal-Mart announced this afternoon that it plans to acquire Chinese hypermarket chain Trust-Mart in a multi-step arrangement, taking possession of 31 stores initially, before taking over the remaining 70-100 stores. According to WSJ.com, hypermarkets "are giant stores that sell a wide range of general merchandise and food." In our area, the term supercenter or superstore is more widely used to refer to these stores. Prior to this acquisition, Wal-Mart had 66 stores in China, 61 of which are hypermarkets. The Wal-Mart/Trust-Mart deal must be considered by Chinese regulators before proceeding.

WSJ.com

OIL STAGES MINI-RALLY

Crude oil prices rose for a third consecutive day and closed at just over $60 a barrel after trading for a little more than $57 last week. The increase in price seems to be tied to a scheduled meeting of OPEC members on October 19. At the meeting, it is likely that cutting production to weaken supply and stabilize or increase price will be considered.

NYMEX
Bloomberg

PRESIDENT SIGNS UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT

As expected, President Bush signed a port security bill yesterday that had the Internet Gambling Enforcement Act attached, effectively making it illegal to fund an online gambling account or cash winnings from such an account.

WashingtonPost.com

WAL-MART ORDERED TO PAY $78 MILLION IN DAMAGES

A jury in Philadelphia ruled today that Wal-Mart must pay $78 million in damages for forcing workers to work through scheduled breaks. The violations occurred between March of 1998 and May of 2006. Wal-Mart is expected to appeal the ruling.

Reuters

OIL HITS NEW LOW FOR YEAR

In London trading, contracts for light sweet crude traded for as little as $57.24, the lowest contract price since December 19, 2005. Contracts on the NYMEX for November delivery currently stand at $57.41. The reason for the decline seems to be that traders do not believe that OPEC will be able to enforce an output cut and U.S. inventories are increasing.

Forbes
NYMEX

CHINA TRADE SURPLUS HITS RECORD

With a September trade surplus of $15.3 billion, China's surplus for 2006 in the first nine months stands at $110.9 billion, surpassing last year's record of $102 billion.

WSJ.com

BUDGET DEFICIT SMALLER THAN EXPECTED

The fiscal year ended September 30 and it was a record year for revenues and expenditures. The Treasury Department issued a report indicating that the deficit this past year came in at $247.7 billion. Here are the results for the past 10 years in reverse order.

2006 = $247.7 billion deficit
2005 = $318.7 billion deficit
2004 = $412.7 billion deficit
2003 = $377.6 billion deficit
2002 = $157.8 billion deficit
2001 = $128.2 billion surplus
2000 = $236.2 billion surplus
1999 = $125.6 billion surplus
1998 = $69.3 billion surplus
1997 = $21.9 billion deficit

Reuters

APPLE TO ANNOUNCE WIRELESS VIDEO IPOD?

I'm usually suspicious of rumors and tend not to believe them, especially when they are speculating about the latest buzz at Apple, but this one seems to have some credibility, so I'll pass it along. According to tech blog engadget, Apple seems poised to make an announcement regarding a future version of the video iPod that will support wireless connectivity and sport widescreen video. The timing seems about right to counter the offensive put on by Microsoft's Zune (November 14 release date), SanDisk's Sansa, and a myriad of other competitors attempting to capture market share Apple's dominant iPod.

GOOGLE TO BUY YouTube

Google has agreed to buy video site YouTube for $1.65 billion in stock, according to Reuters. While investors bid Google stock up over $431 in after hours trading, some, including Mark Cuban, think this was not a wise purchase.

SONY LOOKING FOR ANOTHER CEO?

Sony Chairman Nobuyuki Idei said Monday that the next CEO of Sony would likely "be a Japanese, young generation, 40-45". That comment will no doubt lead some to believe that Welshman Howard Stringer, current CEO, who has presided over the lithium-ion battery recall fiasco and the current problem with PlayStation 3, could be in some trouble going forward. Even if one were to interpret such a comment as innocent, it would hardly be considered a vote of confidence for Stringer. Sony stock has dropped approximately 15% since August 15 as the bad news just keeps on coming.

Reuters

5-YEAR LOW IN UNEMPLOYMENT

The Bureau of Labor Statistics reported that unemployment dropped to 4.6% in September, a five-year low. Only 51,000 nonfarm jobs were created in September, but that was offset by an unexpectedly high 188,000 new jobs in August. There are 6.9 million unemployed people in the United States, according to the Labor Department definition of unemployed.

MICROSOFT VISTA NEARLY READY FOR RELEASE

Vista, the new operating system from Microsoft, is on track for a November release to corporate clients and is expected to be available to retail customers in January. RC2, which stands for release candidate 2, a beta (test version) with fixes for bugs in RC1, was released Friday.

Microsoft is in an odd position of releasing the operating system to the public after the upcoming Christmas buying period, so it is widely expected that the company will offer free and/or discounted versions to those who make new computer purchases starting October 28. The company has not made an official announcement on this.

Microsoft announced Wednesday that they will attempt to prevent pirated copies of Vista by reducing the functionality of any copy that is not registered and certified as genuine within 30 days. The company has used this sort of reduced functionality with pirated copies of Windows XP, but has upgraded the mechanism and hopes to severely limit pirated copies of the operating system.

Reuters

STARBUCKS GOAL IS 40,000 STORES

Starbucks officials raised their long-range goal yesterday from 30,000 to 40,000 stores worldwide, with a split of 20,000 inside the U.S. and 20,000 international locations. The international expansion will focus on expanding in China, and opening stores in Brazil, Russia, India, and Egypt. The company also plans to roll out hot breakfast sandwiches in nearly all locations due to a successful pilot this past year.

Anne Saunders, senior vice president for global strategy, said, "The customer base is broadening and becoming more diverse". Starbucks has experienced growth in several important demographics - women, Hispanics, and non-college graduates.

Investors drove the company's stock up $2.73 yesterday to $38.69, a 7.6% increase.

WSJ.com
Reuters

OPEC TO CUT OIL PRODUCTION

The Organization of Petroleum Exporting Countries will cut oil production, thus limiting the supply, by 1 million barrels. This will be OPECs first production cut since 2004 and amounts to slightly more than 3% of OPEC production.

Reuters

CRIMINAL CHARGES FILED IN HP PROBE

The California Attorney General filed criminal charges Wednesday against former Chairman Patricia Dunn and four others for illegal activities committed during Hewlett-Packard's investigation of a Board leak. The AG said that there was currently no evidence of criminal conduct by current CEO and Chairman Mark Hurd, but that the investigation remains open. Chief Deputy AG Robert Anderson said, "We haven't cleared anyone at this point."

Reuters

TOYOTA IS "800-POUND GORILLA"

Toyota continued its dominance over the big three U.S. automakers by growing sales of cars 18.4% and trucks 34.9% in September. GM and Chrysler saw sales slide in September, while Ford sales were up 4.7%. "They're [Toyota] this 800-pound gorilla out there that nobody can stop," said Erich Merkle, an analyst with Grand Rapids-based auto consulting company IRN Inc.

AP
Reuters

FOREIGN GAMBLING STOCKS PLUMMET

In response to a new law designed to eliminate online gambling, shares of PartyGaming, Sportingbet, and 888 Holdings plunged today on the London Stock Exchange, wiping out $7 billion of market value according to Bloomberg, $6.5 billion according to Reuters. The law is expected to be signed by President Bush in the near future. Many believe that this is the first step in a plan to eventually license, regulate, and tax online gambling provided by U.S.-based gaming companies.

Bloomberg
Reuters

CHINA TO CONTINUE STRONG ECONOMIC GROWTH

The People's Bank of China has forecast 10.5% growth this year and 9.5% for the first half of 2007. This is in line with an estimate of 10% growth put forward by the National Bureau of Statistics last week. In addition to the strong economic growth, inflation is mild in China, likely coming in at 1.5% this year.

AP

EVEN MORE BAD SONY BATTERIES

The news got worse for Sony this morning as Toshiba announced the recall of 830,000 Sony-made batteries and Dell broadened its recall to include 100,000 more Sony-made batteries. This brings the total of recalled Sony batteries to approximately 7 million.

AP

MORE BAD SONY BATTERIES

Lenovo and IBM recalled 526,000 notebook computer batteries made by Sony after a notebook computer caught fire at Los Angeles International Airport. This brings the total recall of Sony-made batteries to over 6 million - 4.1 million in Dell notebooks and 1.8 million in Apple notebooks.

Reuters

HP GENERAL COUNSEL QUITS, PLEADS FIFTH

Hewlett-Packard General Counsel Ann Baskins, who helped oversee the leak probe that is at the center of controversy, resigned today and invoked her right not to testify before a House panel investigating the leak investigation in order to avoid incriminating herself. Having trouble keeping up with all of the rumors, testimony, and resignations? Check out the Forbes timeline and article.

Forbes Timeline
Forbes Article

CORPORATE CROOKS PAY STEEP PRICE

Two white collar criminals partially responsible for corporate scandals paid for their misdeeds on Monday. Andrew Fastow, former Chief Financial Officer at Enron, was sentenced to six years in prison for his role in one of the most infamous corporate scandals in United States history. Bernard Ebbers, former Chief Executive Officer at WorldCom, began serving his 25-year prison sentence for his part in an $11 billion accounting fraud.

Reuters

MEDIAN HOME PRICE FALLS

Among a slew of housing data released recently, one of the more telling numbers about the current housing market was a 1.7% decline in the median home price, the first in more than ten years. At the August sales rate, there is a 7.5 month supply of homes, the largest inventory since 1993.

Reuters

AMERICAN IDOL MOST EXPENSIVE AD BUYS

American Idol will command between $550,000 and $700,000 for each 30-second commercial spot on the upcoming season, making it the most expensive regular television show ad spots for the third year in a row.

Advertising Age

$24 MILLION A DAY MAN

Casino billionaire Sheldon Anderson has earned $23.6 million every day for the past two years according to Forbes, accumulating wealth more quickly than anyone in history, as far as the magazine could determine.

Forbes has produced its latest list of the 400 richest Americans. Bill Gates leads the list again with a net worth of approximately $53 billion.

Full coverage at Forbes.com

FED LEAVES RATE UNCHANGED

The Federal Open Market Committee left the Fed funds rate target at 5.25% at their Wednesday meeting. This seems to indicate that at least for now, the Fed believes it does not need to take action to tame inflation. The markets responded favorably.

Reuters

HP CEO DIRECTLY INVOLVED IN LEAK INVESTIGATION

The New York Times, Washington Post, and Wall Street Journal are all reporting that HP CEO Mark Hurd likely played a more direct role in the media leak investigation than had previously been disclosed.

AP at Yahoo!

CHRYSLER MAKING CUTS, FACING PROBLEMS

DaimlerChrysler AG's Chrysler Group is cutting production 16% for the second half of the year and CEO Dieter Zetsche has said he will consider further restructuring measures. Zetsche said the cuts are necessary because:

1. the increased price of gasoline has changed consumer preferences;
2. slowing demand for big trucks; and
3. rising health-care costs for unionized American workers.

These problems have also hurt Ford and General Motors, but came as more of a surprise at Chrysler where they had put together twelve consecutive profitable quarters.

WSJ.com

YAHOO STOCK FALLS

Yahoo executives announced at a conference today that advertising sales have slowed, particularly in the automotive and financial services industries, causing the company to lower third quarter revenue estimates to the lower end of analysts expectations. This announcement caused Yahoo's stock to drop as much as 13% this afternoon and has negatively impacted Google, eBay, and others.

Reuters
TheStreet.com
WSJ.com

FY2006 BUDGET DEFICIT SMALLER THAN EXPECTED?

Stronger corporate profits have caused an increase in federal corporate tax receipts, making it likely that the actual federal deficit for fiscal 2006, which ends September 30, is lower than the projected $296 billion projected by the White House Office of Management and Budget and is in line with, or perhaps below, the forecast of $260 billion by the Congressional Budget Office.

Reuters

CHRYSLER LOSS ESTIMATE MORE THAN DOUBLES

DaimlerChrysler AG announced that it expects the Chysler division to lose nearly $1.52 billion in the third quarter, up from earlier estimates of $630 million. From The Wall Street Journal:

In a statement, the automaker raised its estimate of the Chrysler Group third-quarter operating loss from €500 million to be €1.2 billion due to "excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles." The company also said its competitors have "further increased margin and volume pressures – particularly on light trucks - by making significant price concessions."

WAL-MART TO ISSUE CREDIT CARD IN CHINA

Wal-Mart Stores Inc. will announce the issuance of its first credit card in China today. According to The Wall Street Journal, analysts believe it will be the first card issued by a foreign retailer in China. Currently less than 5% of the population of China has a credit card. Wal-Mart has approximately 60 stores in China and will initially introduce the credit card in six stores, eventually rolling it out across the country.

FORD ANNOUNCES MORE CUTS

Ford Motor Company announced more cost cutting moves that will be implemented through 2008 to save the company approximately $5 billion. The company also updated future financial projections. Some highlights:

• 33% cut in salaried workers, approximately 14,000 employees (includes 4,000 employees terminated in first quarter of 2006)
  
• Buyout offer on contract of all remaining UAW United States hourly workers
• Closing or selling all Automotive Component Holdings by end of 2008
• Full-year profitability in North America before 2009
• Suspension of dividend on common and Class B stock beginning in fourth quarter

Ford Press Release

MODEST INCREASE IN AUGUST CPI

The consumer price index data released this morning shows that inflation advanced 0.2% in August, and is up 3.8% since August 2005. The major contributor to inflation over the past year has been energy, which is up 15.1% over the past year, but only 0.3% in August. Core CPI, which excludes food and energy, was up 2.8% over the past year.

All figures listed here are NSA, or not seasonally adjusted.

Bureau of Labor Statistics Press Release

ELECTRICITY RATES TO RISE APPROXIMATELY 25%

Residents of Illinois, long the beneficiaries of an electricity rate freeze, will soon be paying approximately 25% more for electricity according to the results of the recent energy auction. On Thursday, the Illinois Commerce Commission voted to accept the results of the auction to supply residential customers with electricity, while rejecting the results of the auction to suppy larger commercial customers.

Chicago Tribune

MICROSOFT GIVES MORE DETAILS ON ZUNE

Some details of Microsoft's Zune digital music and video player have been revealed via earlier leaks and regulatory filings, but the company officially announced some features and photos of the device today. Check out Gizmodo for some pictures or CNET News.com for Microsoft's strategy.

AN INTERESTING OIL/GASOLINE TAX PROPOSAL

With oil prices hovering near $64 per barrel this morning after falling from $78 in mid-July, now might be the time to seriously consider Richard Koo's proposal to increase the gasoline tax simultaneously in China and the United States to 100%. Sound crazy? Read the article before you decide.

BusinessWeek

APPLE'S "IT'S SHOWTIME" ANNOUNCEMENT

Apple's press conference today unveiled the expected movie download service, upgrades to the iPod series of digital music and video players, video games designed to be played on video iPods, and a product named iTV which allows TV playback of videos stored on a computer. The movies are available for download now, some iPod upgrades are available now with others to come in the next few months, the video games are available now, and the iTV device will be available in the first quarter of 2007.

The Seattle Times
IGN.com
AP

BEARS SHUTOUT OF PACKERS MEANS FREE FURNITURE

The Chicago Bears 26-0 rout of the Green Bay Packers means that 206 lucky customers of World Furniture Mall in Plano will receive their money back for furniture purchased over the Labor Day weekend. Store owner Randy Gonigam, a huge Bears fan, designed the promotion so that all furniture up to $10,000 per customer would be free if the Bears held the packers to zero points. Fortunately for Gonigam, he had an insurance policy that will reimburse him for the nearly $300,000 in furniture sold during the promotion.

Chicago Tribune

MAYOR DALEY VETOES BIG BOX WAGE ORDINANCE

Chicago Mayor Richard Daley vetoed the "big box" wage ordinance which would have required retailers with over $1 billion in annual sales and 90,000 square feet of retail space to pay employees a minimum wage of $9.25 per hour and $1.50 per hour in benefits, rising to $10 per hour and $3.00 in benefits by 2010. According to the Illinois Retail Merchants Association, 42 stores with 7,500 employees would have been impacted by the ordinance. According to MarketWatch, "news of the veto buoyed shares of Wal-Mart, which were up 1.4% at $47.35 in afternoon trading. Target shares rose, as well, trading up 1.4% at $51.25."

Reuters

COCA-COLA & NESTLE TO COMPETE WITH STARBUCKS

Coca-Cola and Nestle are developing machines that will goof-proof gourmet coffee drink creation so that talented baristas are not needed. Coca-Cola will enter the high-end hotel and restaurant market with a beverage system called Far Coast and the quick-service restaurant market with a different system called Chaqwa. Nestle is targeting theme parks, movie theaters, and fast food restaurants with its Nescafe Specialty Solutions' bag-in-a-box system.

While Coca-Cola and Nestle may not compete directly with Starbucks in head-to-head competition in company-owned coffee shops, competing indirectly by giving consumers another choice in the already fragmented coffee market could cause problems for Starbucks. Estimates are that 35-39% of customers purchase their coffee from convenience stores currently, while 38% get coffee at coffee shops or local restaurants.

Advertising Age

SPORTINGBET.COM DROPS 40% AFTER ARREST

Shares of online casino and sports bookmaker SportingBet.com resumed trading this morning in London and promptly lost 40% of their value. Prior to the arrest of a company executive in the United States last week, the company was valued at approximately $1.87 billion U.S., but in trading this morning the value has fallen to $1.12 billion U.S., wiping out over $700 million. Trading in shares of the bookmaker was halted last Thursday following the arrest.

Times of London Online

OPEC MEETS TODAY

The Organization of Petroleum Exporting Countries, OPEC, will meet today in Vienna, Austria, to discuss oil output in member countries. Analysts expect OPEC to maintain its nearly full production quota of 28 million barrels per day. Oil prices have dropped from a high of $78.40 in mid-July to below $67 per barrel.

International Herald Tribune
WSJ.com

APPLE TO OFFER MOVIE DOWNLOADS?

Apple appears ready to announce on Tuesday that the company will offer movie downloads. The company's representatives are keeping mum, but invitations have been distributed for a press conference at a movie theater in California on Tuesday which coincides with the first day of the annual Apple Expo in Paris - a perfect time for getting maximum exposure for such an announcement.

International Herald Tribune
The New York Times

FORD PAYS NEW CEO $18.5 MILLION UP FRONT

New Ford CEO Alan Mulally received an up-front payment of $18.5 million to take over the trouble automobile manufacturer. Mulally will also receive a $2 million annual base salary, 4 million stock options, and 600,000 restricted stock units, while an incentive plan that includes a $3.5 million target bonus and other incentives will likely boost his base salary considerably higher.

AP

NOTRE DAME FANS SPEND BIG MONEY

With the Notre Dame football team ranked #4 in the AP and #5 in the USA Today polls, Irish fans are paying big money for tickets, hotel rooms, and even parking due to short supply and strong demand.

For this weekend's Penn State game:

• Hampton Inn regular rate $129 night, $400 night with three-night minimum
• Comfort Suites regular rate $109, $245 with two-night minimum
  
• $59 each for tickets at face value, sold for $1,600 each on eBay
• One parking pass sold for $500 on eBay

For the University of Michigan game on September 16, the South Bend Marriott raised its rate for a double room from $149 per night to $649.

WSJ story at SouthBendTribune.com

U.S. CRACKING DOWN ON ONLINE GAMBLING?

Peter Dicks, chairman of Sportingbet, an online gambling site that allows gambling on casino games as well as sports wagering, was arrested in New York on a Louisiana warrant Wednesday night. The arrest comes two months after then CEO David Carruthers of BetOnSports was arrested on a flight layover at Dallas-Fort Worth airport. U.S. government officials claim that it is illegal to operate an online casino or sports wagering operation that allows people within the United States to gamble. In the past, officials had seemingly looked the other way as online gambling grew in the U.S., but the two arrests this summer of online gaming executives seem to indicate that a crackdown may be under way.

Reuters
International Herald Tribune

GM INCREASES WARRANTY ON ALL NEW VEHICLES

General Motors has announced that it will boost the powertrain warranty on all 2007 vehicles to five years or 100,000 miles.

From the WSJ article, "GM is counting on the new warranty plan to give consumers who still perceive GM cars and trucks as lagging in quality a reason to consider its vehicles, Mr. LaNeve [head of marketing and sales in North America] said. He said GM vehicles have made quality improvements, but acknowledged that there is still an image gap among some consumers. Due to improved quality, GM has been able to cut warranty repairs by 40% over the past five years."

WSJ.com
TheStreet.com

WAL-MART ABANDONS ONE-SIZE-FITS-ALL APPROACH

In an effort to boost sluggish sales, Wal-Mart Stores Inc. has abandoned its one-size-fits-all approach to retailing where all stores stock nearly the same inventory, regardless of location, in favor of tailoring the inventory to fit the customer base in the immediate area surrounding the store. The Wall Street Journal reports that Wal-Mart stores will be customizing their inventory in each store to better appeal to six distinct groups they are targeting - African-Americans, Hispanics, suburbanites, rural residents, empty-nesters, and the affluent.

Wal-Mart is hoping to give a boost to lagging same-store sales. In 2005, the company grew same-store sales at 3%, compared to 9% in 1999. Target, a major competitor, grew same-store sales at 6% in 2005, and has consistently bested Wal-Mart's numbers in 2006.

WSJ.com
MSN Money

GERMANY AND ITALY CONSIDER TAX INCREASES

German Chancellor Angela Merkel has announced that she intends to increase the value-added tax, a type of national sales tax, from 16% to 19% in 2007. Italian Prime Minister Romano Prodi has expressed a desire to raise some capital gains taxes and perhaps introduce an inheritance tax. Both countries are running deficits that exceed the European Union's ceiling of three percent of GDP and intend to use the tax revenues to cut the deficit.

International Herald Tribune

INTEL ELIMINATES 10,500 JOBS

After the market close, as rumored, chip-maker Intel announced the elimination of 10,500 jobs, which represents about 10% of its workforce. The cuts are expected to save Intel up to $3 billion per year by 2008. The severance package costs for the dismissed workers is estimated at $200 million. Intel has experienced declining profits and a loss in market share that many attribute to Intel's delayed and ineffective response to rival AMD's 2003 introduction of the innovative Opteron and Athlon 64 chips.

Reuters

GOOD NEWS FOR CHEVRON

Chevron has had a very good start to this week. First, the company revealed that a test field in the Gulf of Mexico could hold three billion to fifteen billion barrels of oil. To put it into perspective, fifteen billion barrels would approximately double United States oil reserves according to Kristina Shevory of TheStreet.com. The announcement put pressure on oil prices today as light, sweet crude closed down $0.59 at $68.60 on the Nymex. The second piece of good news for Chevron was the announcement that President Idriss Deby of Chad is willing to negotiate a settlement with Chevron and Petronas over the tax dispute that caused him to expel both companies last week.

FORD MOTOR COMPANY HIRES NEW CEO

In a move that came as a bit of a surprise, Bill Ford stepped down as CEO of Ford Motor Company today, but will remain as Chairman. The announcement came after the market closed. The Ford family owns a 40% voting stake in the company.

Alan Mulally, an executive with Boeing, will take over as CEO. Mulally had been considered for Boeing CEO last year, but was passed over in favor of former 3M executive Jim McNerney.

Ford is in the middle of a restructuring designed to return the world's second largest automobile manufacturer to prominence and profitability. Bill Ford is quoted in the AP story as having written an email stating that the turnaround effort "required the additional skills of an executive who has led a major manufacturing enterprise through such challenges before."

AP
MarketWatch

ILLINOIS ELECTRICITY AUCTION

The price consumers pay for electricity in Illinois is likely to rise sharply on January 1, 2007. For nine years, Illinois consumers have enjoyed a rate freeze as deregulation has been slowly phased in. A Dutch auction on Tuesday, September 5, will allow providers to bid on supplying electricity, with the low bid winning. The Illinois Commerce Commission approved the controversial bidding and approval system in January. Governor Blagojevich, among many others, has spoken out against the process. According the the St. Louis Post-Dispatch, rates for some consumers could rise as much as 20% to 50%.

Chicago Sun-Times
St. Louis Post-Dispatch

AUGUST UNEMPLOYMENT

• 4.7%, down from 4.8% in July
• Average time unemployed spent looking for work = 17.4 weeks
• 7.1 million unemployed
• 128,000 added to payrolls, up from 121,000 in July
• 8.8% of African Americans, lowest since July 2001
• 5.3% Hispanics

U.S. Department of Labor, Bureau of Labor Statistics

CAN APPLE CONTINUE DIGITAL MUSIC DOMINANCE?

Apple currently has about a 75% market share in the digital music player market with its successful iPod series, and is the dominant digital music provider with its iTunes service selling nearly one billion downloads per year. Competition ranging from the SanDisk Sansa E280 to the Microsoft Zune digital music players, and MTV's Urge , upstart Spiral Frog, and a myriad of other music download and subscription services (Napster, Ruckus, and Yahoo! Music, to name but a few), threaten to topple the Apple digital music dominance and cash cow.

Focus: Taking a bite of Apple, by Paul Durman and Dominic Rushe

August Auto Sales

Auto and Light Truck Sales
August 2006 vs. August 2005
Winners

• Toyota +17.0% (240,178 vs. 205,362)
  
• Hyundai +6.0%
• GM +3.9% (only second increase of 2006, market share of 24.4%, 363,521 vs. 349,806)
  

Losers

• Ford -11.6% (SUVs & trucks -20.8%, cars +8.5%, 253,976 vs. 287,235)
  
• Chrysler Group -4.2% (includes Chrysler, Jeep, & Dodge, 179,165 vs. 187,085)
  
• Honda -3.2% (includes Acura, light trucks +14.8%, cars -14.5%, 151,253 vs. 156,173)
• Nissan -2.7% (includes Infiniti, 89,848 vs. 92,365)
  

Data listed are from company reports, AP, and industry tracking firm Autodata Corporation estimates taken from Reuters and WSJ articles.

AP at Kiplinger's Personal Finance
Reuters
WSJ.com (subscription required)

Positive Economic Data

U.S. Consumer Spending

• +0.8% in July
• +0.4% in June

Core Price Index for Personal Consumption Expenditures
Core PCE excludes food and energy and is a favorite inflation measure of the Federal Reserve.

• +0.1% in July
• +2.4% August 2005-July2006
• Fed generally considers +2.0% upper limit of acceptable core inflation

Bloomberg.com