Summary of selected articles from this morning's Wall Street Journal with comments on related stocks. Links are to the original WSJ article, which requires a paid subscription. Use this summary as a starting point for research; check the summary against the original before trading:
- Summary: The al Qaeda leader's death, combined with hopes of a nuclear deal with Iran, sparked selling of crude-oil futures on international markets. U.S. benchmark crude-oil futures dropped below $70 a barrel for the first time in two weeks.
- Comment on related stocks/ETFs: Doesn't seem to be affecting the market to the upside: S&P 500 pre-market futures are down 5 points, with Nasdaq futures down 11 points. Investors can trade oil directly with the US Oil ETF (NYSEARCA:USO).
- Summary: Asian markets are taking a beating Thursday: the Nikkei is at a six month low, India dropped 3.2% in the first 20 minutes of trading, Taiwan fell 4.2%, and the Korean Kospi is down 3.5%.
- Comment on related stocks/ETFs: These articles used to be of only secondary interest to most US investors, the key question being "what will the impact be on US stocks when the US markets open today?". But now all these markets are tradable with ETFs, in this case iShares Japan (NYSEARCA:EWJ), Korea (NYSEARCA:EWY), Hong Kong (NYSEARCA:EWH), and Taiwan (NYSEARCA:EWT). The expense ratios are fairly high on these single-country ETFs, but that actually works in your favor if you're shorting them. Frustratingly, there's still no India ETF (though one has been discussed), so the only way to play India is with individual ADRs or two closed-end funds -- the India Fund (NYSE:IFN) and the Morgan Stanley India Investment Fund (NYSE:IIF). The lack of an India ETF combined with rocketing investor interest in India has meant that these two closed-end funds are trading at premiums to net asset value, since closed end funds can't accept asset inflows as investor interest increases. Despite the sharp sell-off in Indian stocks and funds, IIF still trades at a 7.5% premium and IFN at a 33% premium, according to Thomson. The steep premium on IFN in particular enhances its appeal on the short side... if you can borrow it.
- Summary: Federal authorities arrested two people who hacked into Internet phone provider Net2Phone's network and routed their own customers' calls for free. Highlights the security risk with Internet phone service.
- Comment on related stocks/ETFs: Net2Phone is owned by IDT Corp. (NYSE:IDT), whose stock won't benefit from this (in contrast to a recent glowing Barron's writeup). Incrementally positive for traditional carriers Verizon (NYSE:VZ) and AT&T (NYSE:T), though they are reconciled to telephone market share loss until they roll out better broadband services. Most people don't associate the cable companies with Internet phone service (even though that's what they offer), so likely no impact on Comcast (NASDAQ:CMCSA) or Cablevision (NYSE:CVC). The most significant negative impact is on Vonage (NYSE:VG), and the article cross-references the next one below, rubbing more salt into Vonage's wound.
- Summary: The nightmare experience of a Vonage customer who tries to stop her service and is hit by unreasonable cancellation fees is typical of customer service problems with Internet phone services.
- Comment on related stocks/ETFs: Yet more negative publicity for Vonage (VG). When will it stop? At least not until the IPO mess has been cleared up. Until then (and possibly for a long time after), don't touch the stock.
- Summary: "The House approved legislation that would streamline the permit process for companies that want to build or expand oil refineries, but its prospects in the Senate were doubtful."
- Comment on related stocks/ETFs: Jim Cramer has been a strong advocate of power generation infrastructure plays, including Fluor (NYSE:FLR), Caterpillar (NYSE:CAT), and Terex (NYSE:TEX). Details of this theme and the associated stock plays are in this Mad Money summary.
- Summary: Review by king-maker tech columnist Walter Mossberg of two smart phones, Motorola's Q and Palm's Treo 700p. The bottom line: although the Q costs $200 versus the Treo's $400, looks nicer and is far lighter, the Treo wins due to the Q's lousy software which makes it "often irritating to use".
- Comment on related stocks/ETFs: The NYT's David Pogue had a similar response to the Q. Mossberg is one of the few reviewers to tangibly impact consumer opinion. But in this case, most customers won't discover how bad the Q's user experience is until after they've bought it. Instead, they'll be wowed by the low price, looks and weight; positive for Motorola (MOT), negative for Palm (PALM). Blackberry users, however, are the heavy email addicts, and usability means everything to them. So the Q's rollout will likely have limited short term impact on Research in Motion (RIMM). In the longer run, though, MOT has clearly declared war on RIMM. Microsoft (NASDAQ:MSFT), the provider of the Q's software, now has a stronger foothold in the smartphone market. But Motorola is probably furious that Microsoft's lousy software is lessening the desirabilty of Motorola's attractive hardware and leading the reviewers to pan the product. Time to partner with Apple (NASDAQ:AAPL)?
- Summary: Student loan provider Nelnet (NYSE:NNI) has recently come under regulatory scrutiny on its use of government education subsidies. The stock has dropped sharply amidst fears the company will lose these subsidies, which greatly boost its loan yields. But as this sector of Nelnet's loan portfolio will be progressively less significant and fears are already priced in to some extent, the stock may promise some upside.
- Comment on related stocks/ETFs: Nelnet is second only to Sally Mae (NASDAQ:SLM) in its sector - as Nelnet acknowledges that its profit margins are currently pressured even outside this investigation, SLM should be watched as well.
- Summary: J.D. Power released an updated ranking of cars by initial quality. Porsche now leads, followed by (in order) Lexus, Hundai, Toyota, Jaguar, Honda, Cadillac, Infiniti, GMC, Acura, Chrysler, Lincoln, Nissan, and Chevrolet. Notable below-average results: Ford, BMW, Mercedez.
- Comment on related stocks/ETFs: The only real news here is Porsche, but the stock doesn't trade in the US. Typically strong showing from Toyota (NYSE:TM) and Honda (NYSE:HMC), improvement from GM (NYSE:GM), mediocre results from Nissan (OTCPK:NSANY) and Daimler Chrysler (DCX), disappointing results from Ford (NYSE:F). Nothing that isn't priced-in already.
- Summary: Walter Mossberg reviews Apple's low-end notebook computer, the MacBook. The bottom line: "the MacBook is a solid machine at a great price".
- Comment on related stocks/ETFs: Mr Mossberg has been advocating Apple computers over PCs for years (though his review of the MacBook Pro wasn't exactly glowing). In this review, for example, he writes "like all Macs, the MacBook is vastly superior to Windows machines in terms of bundled software and security". Let's be honest: he's right, but that hasn't stopped Apple's computer market share from declining to 2.1% last quarter from 2.2% a year earlier, calling into question expectations of a "halo effect" as iPod users buy Mac computers. So don't be seduced by the review into buying Apple stock (AAPL).
- Summary: Japan's largest brokerage, Nomura, is expanding into private equity, loans and retirement investing, helped by Japan's positive recent stock market performance. It also launched on online brokerage, is expanding into China, and moving more aggressively into corporate finance. However, competition is increasing from banks Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc.
- Comment on related stocks/ETFs: Nomura has an ADR (NYSE:NMR), as does competitor Mitsubish UFJ Financial Group (NYSE:MTU). Steven Towns has outstanding coverage of both in the Seeking Alpha Japan section.
* Seeking Alpha updates *
* Conference call transcripts: We put up the Nortel (NT) call yesterday - a must-read for networking investors. And don't miss the ugly moment from Barnes & Noble's recent call... Amazon execs appreciated it.
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