Wall Street Breakfast: Must-Know News

• UK home prices plunge. Home prices in the UK fell 2.5% from February to March, their biggest drop in 15 years. Meanwhile former Fed Chairman Alan Greenspan thinks U.S. home prices will hit bottom by year end at latest, after which asset markets will begin to heal.
• Greenspan: Don't sweat inflation. Former Fed Chairman Alan Greenspan thinks inflationary fears are unwarranted, at least for now. "It's difficult to imagine any major breakout of inflation as economic slack continues to increase," he said. "What we will see is gradually rising inflationary pressures that will probably be subdued during the current period of slack, but that will surely reemerge when economies pick up."
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• AMD warns, chips away at staff. AMD (AMD) is reducing its workforce by 10%. It now sees a 15% Q/Q drop in revenue to $1.5B, worse than a previous forecast of a 7% sequential drop; analysts had expected $1.6B. Analysts were surprised by the layoffs, which suggest AMD foresees weakness to continue well beyond the first quarter. Shares fell almost 3% AH.
• Alcoa misses, market forgives. Alcoa (AA) kicked off Q1 earnings season, reporting Q1 EPS $0.44, short of the $0.49 analysts expected. Revenue of $7.38B was higher than the consensus estimate of $7.18B. Shares fell just 0.6% in AH trading; analysts noted earnings were difficult to estimate due to substantial currency fluctuations, and said the quarter was otherwise solid. COO Klaus Kleinfeld, CEO Alain Belda's heir apparent, was upbeat. "I see a lot of earnings power going forward."
• WaMu finalizing $7B injection plan. Sources say TPG is hammering out the final details of an estimated $7B cash injection (yesterday it was $5B) that will allow WaMu (WM) to meet all its capital requirements amid deep subprime losses, but would obviously further dilute current shareholders' stakes.
• Icahn, Motorola join hands. Activist investor Carl Icahn finally came to terms with Motorola (MOT), the subject of much recent Icahn vitriol. In exchange for two seats on the board (he had wanted four), Icahn agreed to drop his lawsuits against the company (Icahn was trying to expose mismanagement) and sign a confidentiality pact. Icahn says the victory will give shareholders (well one, at least) "strong input into board decisions affecting the future of the company." One hopes putting the issue to rest will allow Motorola to regain some much-needed focus.
• E-commerce growth slows. Online spending will grow 17% in 2008 to $204B, Forrester says, down from 21% in 2007. The question: Is the sequential drop a result of broad consumer caution; a weakening appetite for online shopping; or just the natural consequence of a maturing industry. Retailers say they're likely to cut back on shipping incentives and focus instead on advertising on social-networking sites. Forrester's Sucharita Mulpuru is unimpressed: "It's great for brand-building and for buzz, but it's still unproven how social networking drives direct revenue."
• Status quo. Morgan Stanley (MS) CEO John Mack and his board will be re-elected today, sources say, despite a weak Q4 on the back of some bad bets. "Investors are looking to his experience," on analyst said. In light of how the markets devoured relative newbie Alan Schwartz (BSC), that might not be a bad idea.
• McClatchy-owned Seattle Times to lay off 200. Changes (MNI) include closing suburban news bureaus and local editions. The company did not rule out further cuts. "We have no choice but to bring our expenditures in line with our revenues," a spokeswoman said. Meanwhile, Washington Post (WPO) won six Pulitzers (that'll make Buffett (BRK.A) happy), NY Times (NYT) won two; Chicago Tribune won one, as did IBD.
• Pump pullback. Guy Caruso, head of the federal Energy Information Administration, says gasoline demand will fall this summer for the first time in more than 15 years amid record-high prices at the pump. He doesn't think prices will hit $4/gallon, but revised his peak price forecast above $3.60. He also called for OPEC to pump more oil.

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Comments

[Bev]

Guess what. In San Francisco I paid $4.09 per gallon for gas!! The future is here.

[Bev]

Guess what. Yesterday I paid $4.09 per gallon for gas in San Francisco. The future is here!!

[Jason98758]

That's a great idea. Why make the buying decision easier for the online consumer who has already sought you out when you can capitalize on <1% success rates via social networking ads?

[codewiz51]

Greenspan: Don't sweat inflation?
Guess what? I paid $3.80 for a gallon of milk in Oklahoma. I guess Mr. Greenspan considers the price of milk a cost of keeping Wall Street salaries justifiably high?

Maybe we consumers should just shun consumption and start buying worthless derivatives to pump up the market and help out the poor ol' investment bankers?

[texaswiz]

Nothing cures high prices like high prices! Demand will fall as consumers feel the pinch of ihflation. This works with all consumption items, not just petroleum. In the beginning the people who make the least will feel the pressure, then as we go further into the trend the middle class will feel the pressure. Finally, every economic class will feel the pressure. Sadly, those on the bottom of the economic ladder will bear the brunt of the hurt. Just because gasoline costs $3.50 per gallon, your employer is not bound to give you a raise. So, if gas costs an extra $20.00 more than it did 15 months ago, that twenty has to come out of some other consumable that you were buying. Most likely to suffer from cutbacks will be food; both grocery stores and fast food, clothing and most descretionary items. Government wonks, economists and bureaucrats are always the last to pick up on anything which affects the general population. People who work out of Washington D.C. are the worst. By the time anything makes it to their radar screen, the trend is well on it's way. Evidently people who work in D.C. do not consume anything.

[texasgolfer]

we know the inside the beltway group understands little and only works to improve their lot in life. yesterday's news, Greenspan did not do it, the Dems did not do it nor did the Reps, it just happened. I understand there is a plan to make more ethenol from all food groups including beer and wine, that will certainly help our future. Maybe I can apply for an earmark

[bjlchem]

As long as hummers and SUV's outnumber small cars on our roads gas prices will go higher. Car pooling just needs to increase. Gas is still way too cheap and wasted - look at those long lines at the drive through.

[David Barsan]

On a very small level, the Dairy Queen I got to in Ann Arbor just reopened and their small Blizzard, which cost around 2.50 last year is now 3.40! I asked about it and was told that one of the large determinants of the price increase was higher-priced milk. Maybe Alan doesn't like ice cream?

[pockyclips2020]

Gasoline demand MAY fall in the US, but will still go up in Chindia!
We should expect to pay $4.00/gal this summer.

And that assumes W keeps his hands off Iran, and the Chinese don't
do anything foolish during the Olympics, like take advantage of the West's weakness and go for Taiwan or Indonesia.

[billddrummer]

People in DC are in a government-sponsored cocoon. Mass transit actually works in that town, and many people don't feel pressured about gasoline because they use their cars only on weekends. My siblings live in and around DC and consistently take mass transit to and from work. As a result, they're oblivious to the impact of higher prices to the extent that their lifestyles are affected.

As far as other inflation is concerned, just don't buy food and energy. After all, the government doesn't count them in the 'core numbers anyway.

[NCP]

Go to the website for some commentary.

[NCP]

go to my website for commentary

[theoilyboy]

This is such an old and broken record.

People whining while drive hummers and wishing oil prices go back to $20 bbls.

People buying bottled water for $5 and $4 cups of coffee.

People shut off drilling in areas based on 1970's era technology for environmental protection.

People arguing out one side of their mouth about free markets, yet wanting windfall taxes on petro companies and gov't intervention in oil markets.


Give it a rest. Accept that your choices have consequences.

Walk or Ride a Bike.

But please just stop whining.

[cora]

Sunt din Romania Bucuresti ,si caut pentru fica mea Beatrice un medicament "INTERFERON" in Romania se aduce din Germania sau America ,deaceea am apelat la dumneavoastra sa ma ajutati.Spuneti-mi daca pot sa-l gasesc la voi in tara.

[Zeonman]

Hummers account for a sliver of total vehicle sales.


On Apr 08 11:21 AM bjlchem wrote:

> As long as hummers and SUV's outnumber small cars on our roads gas
> prices will go higher. Car pooling just needs to increase. Gas is
> still way too cheap and wasted - look at those long lines at the
> drive through.

[lightbulb]

it isn't the hummer owners being hurt, it is the old ford chevy owners being hurt and i would like to see alot more whining , it might help. it can't hurt. americans are being robbed in all facets of life by very rich people that can not get enough money. who on this earth deserves over 50 mil a year income to say nothing about billions.to earn this kind of money the little guy is getting robbed. wake up america. it's all about greed. i can hardly wait till democrats get back in. i miss clinton.