Housing slump: Necessary evil. "After years of unsustainable home price appreciation, this is a necessary correction," U.S. Treasury Secretary Henry Paulson said Wednesday. Paulson said the homebuilding slump will help reduce excesses, and that the Bush administration is not trying to prevent it.
Chance of another 0.5% cut better than 50/50. Following Wednesday's 0.5% rate cut, futures markets fully priced in another 0.25% cut at the March 18 FOMC meeting, and pegged the odds of another 0.5% reduction at 52%.
Greenspan: Recession chances better than 50/50. The U.S. has at least a 50% chance of slipping into recession, assuming it isn't there already, former Fed chairman Alan Greenspan says. Nor does he believe fiscal policy can change America's economic course.
Fisher begs to differ. Lone Fed dissenter Richard Fisher, on why he opposed Wednesday's 0.5% rate cut: “Inflation is bad for Main Street and Wall Street and even for Sesame Street.”
Laptop makers mull margins. Sub-$500 laptops from Asus and others are dominating Amazon.com's (NASDAQ:AMZN) top-10 list, a trend that has big-name brands like Apple (NASDAQ:AAPL), Toshiba (OTCPK:TOSBF) and HP (NYSE:HPQ) rethinking their traditional high-margin approach to notebook design. Meanwhile, global notebook shipments grew a whopping 33% in 2007 to 151M units. HP took first place, followed by Acer and Dell (NASDAQ:DELL).
Paulsen: Time to buy U.S. stocks. James Paulsen, chief investment strategist at Wells Capital Management, which oversees $200B, said he's more bullish on stocks than he's been for most of the past 10 years. "Jobs have not gone away. The consumer is still spending. Most corporations are still making money."
Dump U.S. stocks and buy China/Hong Kong. Famed investor Jim Rogers says the U.S. economy will get much worse. He says the Fed is "out of control" and is failing to provide the fiscal discipline the economy needs. Meanwhile, with Shanghai and Hong Kong markets down 20% from recent highs, Rogers says they're the place to be.
Cheap LBO debt still expensive. Pimco's Bill Gross says despite discounts on LBO debt, prices are still too high. Current discounts of 96-97 cents on the dollar will have to fall to the low 90s or high 80s before it would be prudent to invest in the debt, Gross said.
Amazon: Revenue growth to outdo tech spending. Amazon.com (AMZN) will spend incrementally less on technology and content than its 2008 revenue growth, it said during Wednesday's earnings conference call. "We certainly expect it to be somewhat less than revenue growth in 2008," CFO Tom Szkutak said.
Writers' strike hits TV ratings. The 12-week-old writers' strike is taking a toll on U.S. network ratings; the top five broadcast networks saw ratings drop 17% last week.
Sen. Grassley moves to retain ethanol import tariff. The top Republican on the Senate Finance Committee, Chuck Grassley, said he opposes a possible move by the Bush administration to reduce a tariff on ethanol imports. "By lifting the ethanol tariff, we'd end up subsidizing Brazilian ethanol... we're already dependent on Middle East oil," he said.
Nokia targeted in €12B suit. Nokia (NYSE:NOK) is being sued for €12 billion for patent infringement by IP-Com, a company in which Fortress Investment (NYSE:FIG) owns just under 50%. Nokia expressed shock at the size of the claim, and said it will vigorously defend itself.
Chip maker goes on display. Qualcomm (NASDAQ:QCOM) is set to diversify into handset displays. Its new division, MEMS Technologies, will specialize in displays that consume less power and increase visibility.
DRAM trends will turn the corner in 2008. The DRAM environment will improve in 2008 as some companies will either leave the market or phase out production, an industry insider says. He noted Qimonda (QI) is facing a critical cash burden, while Micron (NASDAQ:MU) seems to be dedicating more of its resources to NAND flash development.
Merck/Schering: Same problem, different outcomes. While both Merck and Schering-Plough have been hurt by worries over Vytorin sales after recent data brought into question its ability to halt heart disease, Barron's says Merck (NYSE:MRK) is a "golden opportunity" for value investors, while Schering's (SGP) outlook remains murky.
Insiders stock up on Raymond James. Raymond James (NYSE:RJF) insiders recently purchased a combined $3M in stock after shares hit new lows, a sign they believe the economy will heal and the financial sector will return to business as usual.