zehnra writes “The U.S. Senate this afternoon passed the FISA Amendments Act, broadly expanding the president’s warrantless surveillance authority and unconstitutionally granting retroactive immunity to telecommunications companies that participated in the president’s illegal domestic wiretapping program. The House of Representatives passed the same bill last month, and President Bush is expected to sign the legislation into law shortly.” The New York Times has a story, as does the Associated Press (carried here by Yahoo!). Reader Guppy points out the roll call for the vote.

Read more of this story at Slashdot.

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selil writes “A story popped up on the ChicagoBoyz Blog. It states ‘Democratic House Speaker Nancy Pelosi, who would like very much to reimpose the old, so-called, “Fairness Doctrine” that once censored conservative opinion on TV and radio broadcasting, is scheming to impose rules barring any member of Congress from posting opinions on any internet site without first obtaining prior approval from the Democratic leadership of Congress. No blogs, twitter, on the web forums — nothing.’”

Read more of this story at Slashdot.

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Filed under: Forecasts, Politics, Housing, Federal Reserve, Recession

The U.S. Federal Reserve will issue new rules next week aimed at protecting future homebuyers from questionable lending practices.

Fed Chairman Ben Bernanke provided a preview of the Fed’s new rules during a speech Tuesday at the FDIC Forum on Mortgage Lending for Low/Moderate Income Households in Arlington, Va. Under the Fed’s authorities, the Home Ownership and Equity Protection Act, the rules — which will apply to all lenders, not just banks — are expected to, among other reforms:

• Restrict lenders from penalizing high-risk borrowers who pay off loans early.
• Bar lenders from making loans without proof of a borrower’s income.
• Require lenders to make sure that borrowers set aside money to pay for taxes and insurance.

‘Front end’ / ‘back end’ ratios deemed key

Economist Peter Dawson told BloggingStocks he’s taking “a wait-and-see approach” regarding the Fed’s mortgage regulation revisions. “This set of revised regulations could be, arguably, the most important federal regulation change, in financial terms, since the last plan to maintain the solvency of the Social Security trust fund,” Dawson stated.

Of critical importance, in Dawson’s interpretation, will be any new regulations and/or regulation changes regarding the ‘front-end’ (mortgage debt to income) and ‘back-end’ (all household debt to income) debt ratios. In conjunction with income, down payment and FICO scores (commonly known as credit scores), the ratios determine the maximum an adult can borrow, Dawson stated.

Lenders and consumer groups are likely to critique the Fed’s new regulations in a number of areas, Dawson stated, with the biggest battles centering on debt ratios, if addressed by the Fed.

During the 2002-2007 housing boom ratios varied wildly across the nation, Dawson stated. “As housing prices kept rising at 10% and 15% annual rates, we went from a mortgage system where debt ratios were raised, then, in some markets and loan types, ignored,” Dawson said. “This could only end badly and it did with the rise in mortgage foreclosures, so it will be interesting to see how the Fed addresses debt ratios.”

Housing Analysis: Without question, given housing’s importance in the U.S. economy, next week’s new/revised mortgage regulations will be a “public policy action of significance” by the United States. The Fed has to come with a plan that’s fair, transparent, and conducive to expanding home ownership, while also not restricting a lender’s ability to recruit loans and profit from loans. And the Fed has to do this in an election year, with a U.S. Congress (and probably two presidential candidates) ready to pounce on any restrictive, problematic, or ill-conceived reform. That’s not a light task. Here’s hoping the Fed gets it right with its first announced reforms.

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Filed under: Economic data, Housing

Mortgage applications increased 7.5% for the week ended July 4, 2008, the Mortgage Bankers Association announced Wednesday.

The Mortgage Bankers Association’s composite index of applications increased to 513.4, on a seasonally-adjusted basis, from last week’s 477.7.

Compared to a year ago, the composite index is down 18.1% on an unadjusted basis.

The Refinance Index increased 8.7% to 1,379.3 from 1,269.2 the previous week and the seasonally adjusted Purchase Index increased 6.7% to 365.8 from 342.8 one week earlier.

Meanwhile, the average rate for a 30-year fixed loan increased slightly to 6.43% from 6.33% the prior week. The average rate for a 15-year fixed mortgage increased to 5.94% from 5.90%.
Also, the share of applications that involved a refinance increased to 37.3% from 36.8% one week earlier.

Created in 1990, the Mortgage Bankers Association’s loan survey covers about half of all U.S. retail residential mortgage originations.

Economic Analysis: A week-over-week increase in mortgage application activity, but it’s important to note the sector was at a low base, due to the housing slump, and that mortgage applications are still down considerably, on a year-over-year basis. Further, for the housing sector to regain its sea legs - - and to help increase U.S. commercial activity - - mortgage rates must move toward the lower-end of their 10-year average range, ideally below 6% for a 30-year fixed rate mortgage.

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Filed under: Products and services, Launches, Consumer experience, Apple Inc (AAPL), Sony Corp ADR (SNE), iPhone, Technology

Sony Ericsson, a joint venture between Sony Corporation (NYSE: SNE) and Sweden-based Ericsson Telecommunications Co. (NASDAQ: ERIC), announced to Billboard Wednesday that the company would be incorporating AM/FM radio features into selected new devices and phones before the end of the year. Designed for global markets, the R300 Radio and R306 Radio phones will be launched in South America first with hopes that the specific AM capability will spur emerging markets and consumer interests in sporting events and listening to music.

According to Billboard, the new phones resemble transistor radios but are not equipped “to grant users to download tracks from the radio but do have a feature that identifies the song and artist played.” Sony Ericsson’s marketing VP for South America, Stephan Croix, told the trade paper the devices are part of “a very easy and straightforward concept that’ll make music more relevant in the mass market,” as opposed to more sophisticated technology like Apple Inc. (NASDAQ: AAPL)’s iPhone that merges music capabilities with phone and Internet functions.

Sony Ericsson recently issued a second profit warning for 2008, hoping to recover in the second quarter after falling behind rival South Korea-based LG Electronics in the first quarter. The warning points to declining European sales, which could indicate why the new radio/phone devices are being pushed in South American markets, in addition to the obvious reasons outlined above. The company is also hoping for a big resurgence in quarter three with the launch of the new Xperia X1 handset in September. The release of the iPhone and how it performs after this week will only add to complications and competition Sony Ericsson might have before the radio/phones are released regionally and later globally.

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Filed under: International markets, Earnings reports, SEC filings, Analyst upgrades and downgrades, Products and services, Management, Competitive strategy, JPMorgan Chase (JPM), Wachovia Corp (WB), Starwood Hotels Worldwide (HOT), Marriott Intl’A’ (MAR), Economic data, Lehman Br Holdings (LEH)

The earnings season was officially launched last night with Alcoa Inc. (NYSE: AA) reporting superior than expected numbers, and tomorrow we’re going to see another massive name, Marriott International (NYSE: MAR) report its second quarter numbers.

The company is due to report its current earnings prior to the market open, and going into tomorrow’s report analysts are looking to see the company show 49 cents per share on $3.15 billion in revenues. The housing slump over the past year has definitely been hurting hotel operators, so it will be interesting to see what kind of quarter Marriott is able to show to its investors.

The last time the hotel chain released its quarterly numbers was back on April 17, when it matched analyst estimates for its first quarter with 33 cents per share. The stock made a brief rally following the release, but over the past month has been in a solid downward trend.

There are definitely some signs on the wall that shareholders could be in store for some more bad news come tomorrow morning. Last month the company revealed that it was lowering its estimate on second quarter growth in North American revenue per available room (revpar) to around 2%. This was lowered from a previous estimate of between 3 and 5%. At that time, the company also forecast that we wouldn’t see any improvements in revpar during the second half of this year.

There are, however, some varying takes on what to anticipate from the company this time around. JPMorgan (NYSE: JPM) has stated that they expect to hear about slowdowns in leisure transient and corporate demand. On June 30 the firm lowered its estimate on the company to $34 from $47.

Last month the stock was downgraded by Wachovia (NYSE: WB) to a “market weight” from an “overweight.” Wachovia said that it sees a lack of catalysts in the industry to boost leisure demand, and noted a slowdown in discretionary spending.

On the other side of the aisle, Lehman Brothers (NYSE: LEH) is more optimistic on the company and is willing to overlook the weak revpar outlook we’ve been given. According to Lehman analyst Felicia Hendrix, Marriott is able to overcome lower revpar, and that the lower figures should not have much effect on the company’s overall results. Deutsche Bank (NYSE: DB) is also a bit more optimistic, and feels as though the company has a better risk/reward ratio than competitors such as Starwood Hotels (NYSE: HOT)

With the stock trading near four year lows, shareholders could definitely use a little good news from the company tomorrow morning. Will they get it? Well, your guess is as good as mine.

What are your predictions? Will Marriott hit its number? Will we start to see the tide shifting for the company and the stock moving higher over the remainder of the year? Let us hear what you’re looking to see from Marriott both tomorrow and over the rest of 2008.

Let’s close by taking a closer look at a 12 month chart on the stock so you can get a better picture of what shareholders have been dealing with:

Join us tomorrow morning when we’ll have results and market reaction to the company’s earnings report.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.

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Filed under: Products and services, Consumer experience, Rants and raves, Competitive strategy, Starbucks (SBUX)

Patrons and employees alike await the final decision about which Starbucks (NASDAQ: SBUX) stores will be closing and who will be getting kind notes explaining why closing 600 stores is necessary, making their jobs not.

According to a report in The Wall Street Journal, about 50 stores have already been notified that they’ll be closing by July 31, and the list will be made public by July 15. The Journal writes of anxiety for the Starbucks faithful who have come to appreciate the caffeine brew and don’t have satisfactory alternatives.

There are two stores in walking distance of my office and when Starbucks opened the second one about 18 months ago I was very surprised. However, I’ll not be surprised if the newer store is among the casualties.

According to the Journal, “The 500 Starbucks stores, as well as 100 store closings announced earlier in the year, are all expected to shut by the early part of next year. Mr. Schultz said in the email that those closings will be staggered over the next several months. Starbucks has stated that California and Florida will have the most closures.”

There is no question in my mind that Starbucks stretched too far into a shrinking economy and is taking the correct action by closing unprofitable stores. This is prone to increase business in the remaining stores, improving the over all bottom line.

Starbucks shares closed yesterday at $15.34, down from its 52 week high of $28.60. It is off pennies in morning trading, on pace with the over all market.

There remains a lot of competition for Starbucks and even though I am a shareholder and do patronize the stores my first cup of the day usually comes from NYBD a few blocks away where I can get a huge coffee and a toasted bagel for about $3, a bargain, and I support a local family business to boot. Since they only have one store, the nearby Starbucks closing is prone to help them as well.

A few Starbucks closing is not the end of the world for the company or the consumer. Now if Brian and Adriana shut the neighborhood bagel shop, that would be a tragedy.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of SBUX.

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Filed under: International markets, Products and services, Polo Ralph Lauren’A’ (RL)

Since January 2001, the dollar has lost much of its value. It’s fallen 71% in value from the 92 cents to the Euro at which it traded back then. This is great news for Europeans who have a chance to come to the U.S.

I’m teaching a group of students from Italy this month. Their friends advised them to come to the U.S. with empty suitcases so they could fill them up with clothing and other retail goods. That’s because when they come here, the clothing that they purchase in Europe looks to be on a 50% off sale. This leads to what may be an investment opportunity for Americans — Polo Ralph Lauren (NYSE: RL). (Its stock isn’t overpriced; it’s lost 39% of its value in the last year and it trades at a price earnings-to-growth (PEG) ratio of 1.2 — a P/E of 15.7 and earnings forecast to grow 12.8% to $4.51 in 2009.)

How so? The Italian students are eager to gobble up as much of its merchandise as they have the ability to. If these students are a microcosm of Europeans, we have the ability to anticipate them to flock to the East Coast of the U.S. during their summer break to boost their wardrobes. They also like Lacoste and Gucci as well — both of whose products are selling at screaming discounts here for those who get paid in Euros.

Unfortunately, what’s good for European tourists is bad for U.S. ones traveling in Europe. I was there last month and found that prices were about 60% higher there than here. Our leaders might have gotten confused about which country they’re supposed to be running.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Filed under: Products and services, Dell (DELL)

After seeing news about the Dell, Inc. (NASDAQ: DELL) “E” mobile internet device (read: miniature laptop) last week, I was perplexed. True, Asus has had excellent luck with the Eee Computer and Hewlett-Packard Corp. (NYSE: HPQ) has announced a similar miniature laptop-type Personal computer. But for some reason, Dell’s new product is being marketed as the device for the “30-minute web experience.”

The new Dell E will come in two screen configurations — a 12″ and an 8.9″. Basically, these are standard laptop PCs with scaled down hardware and ambitions, meant to fill the hole between the smartphone (or iPhone) and the full, 45-second-to-boot laptop Personal computer. I thought this experiment was already run years ago with the ridiculously-priced UMPCs, which cost as much or more than a standard laptop PC. The good news is that Dell and HP’s creations are starting out at a nice price point: $299.

This is basically a new price point for a laptop Computer, no matter what the marketing states. This is good news for consumers. The combination of physical size, power and price might finally sway some buyers who really need a portable, instantly-usable laptop Computer for short bursts of time. That, or the market will prove that there just isn’t a profitable spot between a smartphone with PC-like functions and a fully-usable laptop PC. That’s, until all the things you do on a laptop focus around web access utilities and not applications like Microsoft Word and Excel and Adobe Photoshop.

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Filed under: Products and services, Marketing and advertising, Ideal Purchase (BBY)

When Best Buy, Inc. (NYSE: BBY) decided to pick up the ZAGG (OTC: ZAGG) invisibleSHIELD product, gadget fans everywhere need to have cheered. After all, the ZAGG product, which I’ve used, is an invisible shield made of military-grade film that covers all exposed surfaces of thousands of portable electronics, saving them from harm, scratches and nicks. What’s not to love? Instead of those bulky and hard to handle leather and rubber cases, just cover your beloved iPhone, BlackBerry or digital camera with some clear film and drop it all you want. Well, hopefully not.

Ideal Purchase has a unique marketing opportunity here that it may not recognize yet. Portable electronics are where it is at. We all want to have our email, voice-mail, digital camera ability, text messaging and maybe even portable World wide web access anywhere we go, at any time. This means portable gadgets. While most of them are designed to look and feel extremely nice, the rigors of abuse in the real world don’t generally agree. That’s where ZAGG’s product comes in.

Ideal Buy needs to land a major web and possibly TV marketing campaign to show just how easily this product can protect their sensitive and loved personal portable electronics. Get customers into stores to buy or special order one and make sure they leave with a few peripheral buys. Accessories generally don’t get the general public excited, but this is one that should. Some retailer needs to take advantage of it.

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