In the fast-food burger wars, it looks like McDonald’s has the upper hand and may be grabbing some market share from rival Burger King. Earlier today, Burger King reported that system-wide in the U.S. and Canada, its sales fell 8.2% for the first two months of the year – and it said 3 percentage points of that loss was likely due to bad weather in February, especially all of the snow in the Northeast/Mid-Atlantic region. While McDonald’s U.S. numbers didn’t exactly light the world on fire, it had an 0.6% gain in February with an 0.1% loss for the first two months. McDonald’s is actually seeing strong growth overseas. Not Burger King, which saw meager growth in Asia/EMEA and declines in Latin America. Weather obviously didn’t affect McDonald’s. What hurts both is unemployment. And not until the jobs situation turns around will we see any significant improvement for either. But it does seem that either McDonald’s is picking up share or BK customers are hurt more by the unemployment situation.
After a work-induced (too much of it!) hiatus, I’m back blogging and want to re-launch myself by pointing out a memorable piece by WSJ editorialist Daniel Schwammenthal, that has nothing to do with the world of finance. It’s about the plight of the tiny Jewish community of Malmo, Sweden, in an increasingly intolerant Europe. Have a look. Also, randomly, I met an opera singer at a Maplewood, N.J., sandwich shop over the weekend. A fellow with startlingly blue eyes was poring over a thick musical score while my husband and I ate lunch at a nearby table. Bursting with curiosity, I asked what he was up to. Mark Showalter introduced himself and explained he was prepping to understudy a role in an upcoming Metropolitan Opera production of Mozart’s “Magic Flute.” Enjoy this gallery of costumed opera stars, including Showalter himself.
Banks, Corporate Finance, Corporate Governance, Derivatives, Investment Banking, United States, Washington / No Comments
Famed investor Warren Buffett, as is his wont, talked about some corporate governance issues in his recently released annual letter to shareholders.
Though typically not the comments that grab the headlines when stories are written about the much-anticipated letter, Buffett over the years has said some smart and provocative things about boards of directors.
Buffett has been a director, so he speaks from personal experience. And his views have sometimes gone against conventional wisdom. When the independence of directors was the consensus favorite governance play in the aftermath of the late 1990s corporate accounting scandals, defined as separation from management, Buffett said real director independence came in the form of significant ownership of the company’s shares.
Companies were not just cutting costs during the recent recession – they were sitting on cash and building larger cash positions in case they needed it. Now, they are starting to put that cash to work. Applied Materials becomes the latest company to return some cash to shareholders through not only a dividend hike but via a stock buyback. The hike is a modest penny, but that is a 17% increase. Applied Materials joins a host of companies that have announced dividend increases recently, including: American Greetings, General Dynamics, Public Storage, Waste Management and Wal-Mart. We’re likely to see a parade of dividend hikes if the economy continues to improve.
Auto Industry, California, Economy, Energy, Environment, Investing, Transportation, United States, Wall Street, Washington / No Comments
If you are looking for reasons to be optimistic about prospects for the American economy, and that search these days requires real effort, spend some time with the proponents and practitioners of clean technology.
For a layman, it’s a bit like going to the world’s fairs of yesteryear, filled with whizbang and excitable notions of how different technological advances, now at various stages of development, will dramatically alter our future daily lives.
From electric cars to the possible creation of synthetic organisms that would eat carbon dioxide to ‘clean coal,’ to wind and sun power and oilman T. Boone Pickens’ nationalist campaign to use U.S.-drilled natural gas in trucks to replace some imported crude oil, it was on display at The Wall Street Journal’s ECO:nomics conference in Santa Barbrara, Calif.
Kelly Services stock has been on a super ride over the past year.
There were many interesting numbers in the Labor Department’s report on employment today, including a sizable increase in the number of temporary jobs that were created in February. There were 48,000 temporary jobs added in February and the department said since the temp job sector hit a low in September 2009, 284,000 temporary jobs have been added.
This bodes well on at last two fronts. First, companies permanent hiring is usually preceded by temporary hiring. And for investors looking to take advantage of the temp hiring trends, you can buy shares of companies that help other companies hire new emplyees, like Kelly Services. It’s shares are up more than 165% over the past 52-weeks and the jobs report out today moved its stock price up nearly 4%. It is trading just shy of its 52-week high. Other hiring agencies share prices are reacting the same way. Manpower is up about 3.5% and Monster.com is up about 4%. The question is whether you’ve missed the rally. You likely haven’t missed all of the upside but you certainly won’t continue to get those high octane returns.
Kelly Services stock price as compared to the DJIA
An emerging theme at The Wall Street Journal’s ECO:nomics energy conference is that a lack of action by the U.S. government on climate change legislation creates uncertainty for utilities to embark on major, long-term investments.
Skepticism has been frequently expressed at the conference in Santa Barbara, Calif., that Congress and the administration will be able this year to pass legislation that essentially sets a price for carbon emissions.
Michael G. Morris, chairman and chief executive of American Electric Power, which he described as the largest coal burner in the U.S., supported the notion of a carbon price set by the government as it would allow businesses to “be better about your planning,” he said.
“The more uncertainty that can get sorted out, the more willing” companies will be to make big, long-term investments, said Lewis Hay III, chairman and chief executive of FPL Group.
“Some sort of price signal” about carbon is needed for investment certainty, said Tom Albanese, chief executive of Rio Tinto. He said his “preferred view” is a cap and trade system, as opposed to a carbon tax.
Auto Industry, Commodities, Crude Oil, Energy / Comments Off
The number of automobiles on the planet will double by 2050 to two billion and 40% of those cars at mid-century will be electric cars.
So said Peter Voser, the chief executive of Royal Dutch Shell, at the Wall Street Journal’s ECO:nomics conference in Santa Barbara, Calif.
Along the way there will be room for all sorts of alternatives, he said.
Banks, Credit Crisis, Economy, Video, Washington / Comments Off
Credit Crisis, Credit Markets, Derivatives, Financial Markets, Government, Greece, Hedge Funds, Insurance, Investing, Regulation / Comments Off
The volatility in trading credit default swaps of soveriegn nations, especially of Greece, will now be stirred by an additional fundamental factor: the real threat of significant government regulation.
An already skeptical governing class in Europe about these instruments when they were confined mainly to insuring against corporate default has ratcheted up to outright disdain in many quarters now that they often focus on countries.
Even believers in free markets have to wonder about credit default swaps. You’ve heard the quotes that put these instruments in sharp relief. George Soros said credit default swaps were like letting someone take out insurance on a stranger and then shoot him. They stand out from regular insurance in a simple way: you can insure against something you have no stake in.
If you make a strong bet that someone is going into default, you have the ability by that very action, if it’s big enough, and through related market moves, to increase the chance of it happening,
If that entity is a nation the impact can be on millions and will resonate far beyond the financial world into the heart of politics and regulation.
This is where recent comments by U.K. Financial Services Authority Chairman Adair Turner make sense. He suggested you limit credit default swaps to those who actually own bonds that need to be insured against default. Others have made similar suggestions and that may be the future of at least soveriegn credit default swaps.
