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."