There was an innocuous throw-away line in the middle of the McDonald’s (MCD) conference call on Thursday. It was not about same store comp sales or margins or foreign exchange or menu changes or any other blah blah blah earnings metric. Rather it was a comment about how France is lowering its value added tax [VAT].

That’s right, France. You know, the country that supposedly hates everything American. Certainly MCD is one of the most American brands know to humankind. The same France that Americans, like our late evening comedians, make fun of because they eat rich foods, smoke too much, bring their dogs to restaurants and don’t share our zest for bravery on the battlefield.

Below is contained the Shareholders' Bill of Rights. These rights are designed to protect the interests of shareholders and all those people who hold capitalism to be precious. Please link this bill of rights to your friends and colleagues. Help save capitalism from those who seek to destroy it.

Shareholders’ Bill of Rights

If the General Motors (GM) 1 for 100 stock split becomes effective then the stock price would theoretically become 100 times its current value. This would not create an issue with the S&P 500 Index (SPX), which is market capitalization weighted. However the people over at Dow Jones, now owned by News Corp. (NWS) have a predicament on their hands. The Dow Jones Industrial Average (DJIA or INDU) is a price weighted index. Each constituent stock is represented by one share, regardless of the stock price or market capitalization. Thus a higher priced stock like International Business Machines (IBM) is nearly 10% of the index while a lower priced stock like Alcoa (AA) is just 1%. If the “new” GM post-reverse split shares are 100 times the current price then the “new” GM shares would jump from the lowest weighted stock in the index to the highest weighted stock.

So what is Dow Jones to do for its grand old Industrials Index? First they could leave the status quo alone and just let GM and its newly inflated price dominate the index. That would be a disaster and the index would become even more irrelevant than it currently is. Second they could seize the opportunity to transform the index to a capitalization weighted index. I doubt that would happen. It would require teaching old dogs new tricks. Lastly, they could kick GM out of the index and add a more meaningful stock like Apple (AAPL) which at a price of $130 and market cap of $117 billion is as worthy to dominate the index like IBM with its $137 billion market cap rather than GM with a dubious market cap of $1 billion. I think that the replacement strategy is most likely for the Dow Jones Industrials. Stay tuned index fans.

Disclosure: At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC was long shares of AAPL --- although positions can change at any time.

All I am hearing is the market moved "too far to fast" and "mark-to-market is already priced in". I think these are just euphemisms for saying "I missed it". The tide has turned and now the bulls that indeed were willing to buy on a bottom are in control.

The NASDAQ Composite [CCMP] and 100 [NDX] are both higher on the year. So is the LakeView Restaurant and Food Chain Index [LVFRI]. Money is being made. We are back to a fundamentally driven market and those who over relied on negativity and charts are being left behind.

The Euro broke $1.30 to the U.S. Dollar for the first time since February 9. I am finally seeing some multinationals getting a nice bid as the USD weakens.

Philip Morris International (PM) and McDonald's (MCD), both of which were hammered as the markets fell and the USD strengthened, could get a jet propelled tailwind by strengthening global markets and EUR.

Pfizer (PFE) takes over Wyeth (WYE), a Madison, New Jersey company. Merck (MRK) takes over Schering-Plough (SGP), a Kenilworth, NJ company.

What happens if Johnson & Johnson (JNJ) takes over Bristol-Myers Squibb, headquartered in New York City with facilities spread out over New Jersey? Wall Street brokers and Money Center banks losing jobs has to some extent been absorbed into the New Jersey economy. Mergers and acquisitions in the pharmaceuticals space could push the state into further economic contraction. I am not saying that New Jersey becomes Michigan or Nevada or California but a manageable problem could get worse.

On Bloomberg radio yesterday morning former SEC Chairman Arthur Levitt Jr. categorically stated that he sees no value in reinstating the uptick rule. Levitt ruled the SEC from 1993 to 2001. Thus he was in charge of the regulatory agency for: the tech bubble, Wall Street Analyst scandals, Enron, WorldCom and Long Term Capital.

Need I say more? Unfortunately I do because he is very well connected politically and is now a senior advisor to the Carlyle Group. Thus, his word carries weight with the current administration in Washington and the SEC. Any hopes of the reinstatement of the uptick rule may now be dimmer than market participants would like. In the final analysis I hope Levitt is ignored because the elimination of the uptick rule has created much financial destruction.

Another year has passed. I hope that you managed to survive this most difficult and challenging year. Now for the seventh year, and back by popular demand, I would like to share with you the 10 Things That I Will Not Miss About 2008 (and do not want to see ever or hear again).

1. Investing With a Guy Named Bernie

Apple (AAPL) is off $6 after hours. I picked some up to add to existing positions. However, I will sell this purchase and keep my core position if we get a bounce. I think that there is too much reading into AAPL decision to phase out of the Macworld media circus and have someone other than Steve Jobs make the presentation.

Macworld needs AAPL more than AAPL needs Macworld. By having someone other than Jobs speak, it allows the company to show off the talent below Jobs. Yet, traders are interpreting this move as an indication of Jobs’ potential deteriorating health. If AAPL has something new to unveil then it can do so at its own choosing. Having to force the company to meet the schedule of Macworld is plain silly.

As I look at my Bloomberg screen, with just under 1 hour to the FOMC interest rate announcement, the 30 year Treasury bond is selling at a yield to maturity of 2.93%. Why don’t we use the 30 year Treasury to finance the mortgage market?

It would be very simple to construct. The US Treasury offers loans to banks at 50 basis points above the 30 year at issuance to those who are willing to make mortgage loans. That would now be 3.43%. Then the banks would lend to qualified – that is, qualified in the traditional sense and not by the 2005, 2006 or 2007 definition – borrowers at 100 basis points over the fixed rate loan from the Treasury. The banks would then pledge the mortgages back to the Treasury as collateral for the loans. To top it off, let the mortgages be portable and allow homeowners to roll it from one property to another as long as they sell the first property and the second property is worth at least what the initial property was worth. No need for mortgage brokers or mortgage backed securities.

The Bernard Madoff fraud arrest is going to take even more investor confidence out of the market. I was speaking to a colleague about the hedge fund industry after I returned from the IMN Super Bowl of Indexing Conference. In my opinion I thought that the hedge fund industry’s best days were in the past and that the beneficiaries would be mutual funds, ETFs and separately managed accounts. The secrecy and leverage which is a characteristic of the hedge fund industry is simply going to have to be regulated or legislated away. The fund of fund concept is no longer economically feasible as well as it has all of those problems but to a second order.

As to Madoff, one has to wonder – where were the firm’s independent accountants and brokers? Did they just sit idly by? One thing we know about fraud is that it usually takes more than one person to keep the scheme perpetuated. I would expect more arrests to be forthcoming.

That was truly a horrible jobs report that was delivered on Friday before the market opened. It will no doubt engender a series of large downward estimates. However, be careful of negative extrapolation. It is my opinion that most economic data points’ estimates are nothing more than guess work.

When I was at The Wharton School of Business in the early 1980s (which had a similar but not exactly same economic environment to that of today) I had the pleasure of taking an advanced macroeconomic class taught by Professor Robert Shiller . Prof. Shiller is now at Yale University and is widely known as co-creator of the Case-Shiller Index. For the term project we were asked to develop an econometric forecast of many data points such as unemployment, U.S. Treasury interest rates and GDP.

There is no doubt that the 2008 holiday shopping season will be more challenging versus last year's. Here are some of the factors and trends that I foresee this year:

1. Overall consumer purchases will be down versus 2007. I expect consumers to shorten the circle of recipients for which they will purchase holiday gifts. So while the immediate family – children, parents, grandparents and grandchildren – will still be receiving gifts, the second order gift giving will be trimmed back. The family dog should expect to be less spoiled than in the past.
2. There are really no must have items that consumers are clamoring to buy this year. The surge in flat panel televisions occurred one and two years ago. There will be some consumers seeking to buy flat panels on sale but the demand has dropped off. No new game consoles were introduced this year and there are no big new game titles that are attracting gamers’ attention. We are in between upgrade cycles. Finally, on the toy front, there are no new Tickle-me-Elmo type toys that caused fights amongst grey haired ladies in years gone by.
3. Black Friday traffic will be strong as stores opened as early as Thanksgiving evening. A beneficiary of the early heavy traffic will be mall based restaurants and food courts which should be packed as shoppers still have to eat. This will continue the trend of quick service and lower priced restaurants stealing business from the higher priced eateries.
4. In 2007 Thanksgiving was several days earlier than in 2008. Thus we have less shopping days between Thanksgiving and Christmas this year. Deep discounting could start even earlier this year due to the shortened selling season.
5. Falling gasoline prices at the pump are going to buffer the extent to which retail sales will get hit by the economic slowdown.
6. Gift cards will become an even bigger aspect of holiday sales than in the past.
7. Holiday parties thrown by companies are being down sized or eliminated. Again this will negatively impact the casual dining restaurants and chains which provide catering services.

Disclosure: None

If you are flummoxed by the relationship between pre-market moves and market action when the market opens, then you are not alone.

The movement in the e-mini futures has been volatile in the last half hour of trading, after the market closes and before the market opens. Given the lack of liquidity in the equity markets right now, it does not take a huge amount of trading in the e-minis to move the markets in a dramatic fashion.

Yum Brands (YUM) caught a nice upgrade to buy from UBS (UBS) yesterday. The stock is rallying about 3 - 4% on the analyst report.

I agree with the bullish conclusion that the analyst arrived at. UBS lowered its price target to $40. My target is $42 so we are not far off. YUM will benefit from declining commodity prices and the substitution effect as consumers trade down to more value oriented restaurants.

Yesterday Wal-Mart (WMT) reported its earnings, beat by a penny and confused everyone with its convoluted Forex laced guidance for the fourth quarter. (Call Transcript) I have been quite public in expressing my opinion that WMT would be a victim of Obama policies. In particular, I am worried about potential anti-trust efforts to break up WMT as well and the impact of the Employee Free Choice Act.

However, Andrew Ross Sorkin had a very interesting article in Tuesday’s New York Times. In the article he discusses a conversation that he had with David Boies, a prominent attorney who was hired by Washington to “bust up” Microsoft (MSFT) in the 1990s.  Boies is of the opinion that Obama would not take an active antitrust stance in his first two years of office.

Bloomberg TV ran a nice story on Ralcorp (RAH) yesterday morning. RAH produces generic foods and recently purchased Post cereals from Kraft (KFT).

In this economy more consumers are going to trade down to cheaper (or as we say in economics, inferior) priced goods. RAH should benefit from this shift in consumer purchasing habits.

Budweiser (BUD) continues to trade at a big discount to the $70 all cash acquisition price from InBev. On Thursday InBev (INBVF.PK) affirmed that the deal is on track.

I hear from my investment banking experts that the deal is fully funded. However, the arbitrageurs who would normally be bidding up BUD on the 7.3% discount to the deal price are not getting the funding to play the game. The prime brokers simply are not letting any of their liquidity hoard out of their hands as hedge funds continue to blow up.

The S&P 500 (SPX) has risen or fallen by 5% or more on 10 trading days this year. In fact all of those 10 daily moves have occurred in the last 29 trading days (since September 29).  From 1950 through September 28, 2008 the SPX has risen or fallen by 5% or more on only 19 occasions, with 5 of those 19 days associated with the 1987 crash. By this measure we are in unchartered volatility territory.

Speaking of unchartered volatility territory, the LakeView VDEV Volatility Index hit another all-time high yesterday of 4.22%. The VDEV is posted everyday on the LakeView Asset Management website under "News and Events" and on TheFinanceProfessor.com website on the Bulletin Board.

Key Corp (KEY) reported a lousy quarter but one that was not the worst case scenario. Sure, NPLs and loan loss reserves rose. However, KEY is cleaning itself up for sale. On the conference call management stated that it would apply for $1.1 billion to $3.3 billion in TARP financing. The company also cut costs aggressively.

The feeling I get is that KEY is putting itself up for sale with the assistance of the TARP despite its assertion that there is no regulatory or government pressure to consolidate. KEY is trading significantly higher despite reporting a loss yesterday.