Under The Radar News - Tuesday

Mack on markets. Morgan Stanley (MS) CEO John Mack says today's markets are the most difficult he's seen in 40 years, but added the U.S. is nearing the end of the subprime crisis. However, problems with commercial-mortgage assets, European debt markets and mid-size U.S. banks should keep the current financial crisis going for several more quarters. Mack said he's encouraged by Washington Mutual (WM) receiving a $7B infusion from a TPG-led group, indicating there's still plenty of cash on the sidelines.

Commodity prices not immune to weak economy. Despite a spectacular rally, commodity prices are unlikely to escape a demand-led slowdown resulting from an anticipated global economic downturn, Fitch ratings says. Prices will remain high relative to historical levels, though. The report notes that while previous surges tended to be limited to a select few commodities, this bull has produced gains from 2003-07 in all categories of raw materials.

Too early to get toes wet in financials. Investors should resist the temptation to "bottom fish" global financial stocks due to their perceived low valuations, Merrill Lynch (MER) analyst Richard Berstein says. "We continue to suggest underweighting financial stocks because of the myriad of risks facing the sector. This applies to financials in a global context, not simply to U.S. financials." He thinks institutions that focus on non-U.S. customers, who save more and take on less debt, will do better.

Credit crunch anything but over - IMF. Credit market turmoil could result in eventual losses of almost $1T, the IMF says. "The deterioration in credit has moved up and across the credit spectrum to prime residential and commercial mortgage markets, and to corporate credit markets. As the credit cycle turns, default rates are likely to rise across the board."

Regulator pulling cover off auction-rate debt sales. Finra (Financial Industry Regulatory Authority) is probing how auction rate securities were represented to investors by their sellers. Securities regulators recently subpoenaed UBS (UBS), Merrill Lynch (MER) and Bank of America (BAC). Brokers pitched auction-rate securities as super-safe, liquid investments with interest rates slightly better than money-market funds. Now investors want to know why they weren't warned about the possibility of failed auctions.

Insurer bankruptcy pounds First Marblehead. First Marblehead (FMD) is getting pounded (-35%) after the firm that guarantees its private student loans (TERI -- The Education Resources Institute Inc.) filed for bankruptcy. The move shifts the credit risk back to FMD. First Marblehead says it's "working diligently on securing an alternative guarantor as well as structural solutions for loan default guarantees for future originations."

How's this for consensus. Lehman says shares of Fannie (FNM) and Freddie (FRE) will soar to $45 or more, while Goldman Sachs thinks they're headed to $16 or less. FNM currently trades around $30 and FRE for $27. Goldman analysts say credit losses at the companies will "increase rapidly." Lehman analysts think the firms have "reached an important inflection point" and should gradually outperform the market.

nPhone confirmed. Nokia (NOK) confirmed it is developing a touchscreen handset that (it hopes) will compete with Apple's (AAPL) iPhone. "Tube" (better than "Tank") will support Java and upload photos to the web.

You can call with it too? Q: "What do you call a mobile phone that owners employ for voice communications less than half the time they are using it?" A: "Apple (AAPL) calls it the iPhone." iSuppli says iPhone users spend 46.5% of their time talking; 12.1% surfing (vs. 2.4% on average); 11.9% listening to music; 10.4% emailing. 15% of time is spent texting, in-line with other mobile phones. Smart phones from HTC (who?) are used even more than iPhones for web surfing, but the iPhone has the greater market impact. Google (GOOG) and Bank of America (BAC) recently noted that a rapid rise in traffic from iPhone surfers has forced them to modify their mobile support platforms.

Salesforce to resell for Google. Salesforce.com (CRM) will begin reselling applications from Google (GOOG), such as Google Documents. Such a partnership may advance speculation that Salesforce CEO Marc Benioff would happily sell-out to Google, a move that could help Google prop up its enterprise roster.

Boeing's last stand. Analysts say Boeing (BA) better get it right when they reveal the new-and-delayed 787 Dreamliner schedule tomorrow, because yet another faux-pas might send shareholders into orbit. "The more they miss, the more I get the impression they don't even know what the problems are," an aerospace maven says. Shares are already off 26% since the delays began in October. "What we are looking for is for Boeing to give us a feel for whether they have their arms around the issue," says a portfolio manager. Consider this: Boeing once thought it would start shipping the planes next month.

NAND sales growth forecast dives. iSuppli cut its forecast for global NAND flash sales growth to 9% ($13.9B) from a previous 27% ($15.2B) amid weakening consumer spending. "NAND flash is used heavily in consumer-electronics applications – including MP3 players, USB flash drives and digital still cameras – which are driven by retail sales to consumers. Spending growth on these items is expected to slow in 2008 compared to 2007 due to the U.S. subprime mortgage crisis and its collateral impact on worldwide consumers and economies," it said.

ECB lends more dollars. The ECB lent $15B to banks who bid for more than $30B. It is the sixth time the ECB has lent greenbacks.

Ok, but how many robots? Robots will do the work of 3.5 million in Japan by 2025. It's actually good news; the country suffers from population shrinkage (1.3 babies per woman) and a shortage of workers. That would save the country $21B in pension and insurance payments. Until they unionize, that is.

If clicks were investments. Compete looks at how portfolios built from the top 10 search queries at selected financial websites would have fared during the past quarter. Starting with $10K on Dec. 31, Yahoo Finance's (YHOO) search set would have left you with $8,100 -- best of the bunch. After that, CNN Money (TWX) $7,900; MSN Money (MSFT) $7,800; MarketWatch (NWS) $7,400; and coming up the rear, Google Finance (GOOG) $7,000. Moral of the story: Watch who you search with. (Hmm... I wonder how Seeking Alpha searchers would have fared.)

Pending homes sales fell 1.9% to a new record low. One economists reaction: "The data suggest we haven't really seen a bottom yet in the housing market. There is a huge mismatch between prices and median incomes. There is potential for further declines in home prices of another 10% or 20%, especially in areas that have had the biggest run-ups. The big concern is that credit is getting tighter all around, not just for mortgage loans but also for consumer loans and business loans." - Raymond James chief economist Scott Brown

More RBS firings. Royal Bank of Scotland (RBS) is set to announce a third stage layoffs which began after the RBS-led takeover of ABN Amro (ABN). This round will hit the rank and file; managers were sacked in previous phases.

Comments

[mrtaxx]

APPLE: MacDailyNews Response to the downgrade
MacDailyNews Take: April 8, 2008: Poor Tavis of Morgan Keegan obviously couldn't analyze his way out of a wet paper bag. The real risk here is in listening to analysts employed by second-tier regional firms who fall hook, line, and sinker for ginned up election year efforts to talk down the economy* while ignoring and/or not comprehending what's really happening at Apple Inc.

*Which, of course, can become self-fulfilling prophesies. Still, we require proof that any weakness in consumer technology spending is actually impacting Apple negatively rather than positively. For example, perhaps any threat of "recession" will cause people to spend their technology dollars much more wisely, thereby getting themselves Macs which run all of the world's software and also retain their value far better than run-of-the-mill PCs? There are a lot of variables in play here and McCourt is out of touch with, frankly, better analysts who cover Apple.

Of the 28 analyst firms making recommendations on Apple Inc (AAPL) stock today, as covered by NASDAQ:
• 8 - Strong Buy
• 16 - Buy
• 3 - Hold

And only one, little ol' Morgan Keegan, says "Underperform."

[seeksome]

Apple is going higher they have no competion in there niche!
seeksomething.com