eldavojohn writes “There have been a lot of tests in using quantum mechanics to communicate across large distances. But a student & a professor at USC have proven that the Viterbi algorithm can be applied to quantum communication. In the traditional Alice sends Bob a message scenario, ‘Bob can reliably spot errors, and knows which message qubits are bogus before he opens the message — crucial, because opening it destroys it; and if it is garbled, he has nothing.’”

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Hugh Pickens writes “A new study at the Jet Propulsion Labs shows that weak gravitational pull of a “gravity tractor” could deflect an Earth-threatening asteroid if it was deployed when the asteroid was at least one orbit away from potential impact with Earth. First a spacecraft would be crashed directly into the asteroid, similar to the Deep Impact mission that impacted a comet in 2005. This would provide a big change of direction, but in a less controllable fashion that could push the path of the asteroid into a dangerous keyhole. But then a second spacecraft, the gravity tractor, would come into play, hovering about 150 meters away from the asteroid, to exert a gentle gravitational force, changing the asteroid’s velocity by only 0.22 microns per second each day. Over a long enough time, that could steer it away from the keyhole. In the simulation, a simple control system kept the spacecraft in position, and a transponder on the asteroid helped monitor its position and thus determine its trajectory more precisely than would be possible otherwise. ‘The gravity tractor is a wimp, but it’s a precise wimp,’ said astronaut Jack Schweickart. ‘It can make very small, precise changes in orbit, and that’s what you need to avoid a keyhole.’”

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Filed under: Products and services, Rants and raves, Apple Inc (AAPL), Market matters, iPhone, Chasing Value

Well, things played out as I thought and Apple, Inc (NASDAQ: AAPL) shut on Friday August 1, 2008 at a price of $156.66 and opened pennies down this day. I will be the first one to admit that a few of my calls have been terrible, but this one was right on target.

Quoting from one of last years posts, “However, I thought Apple might be worth up to $150 and a month later was willing to take into account $160 and that’s where I stood.” So I’m on record pegging the stock between $150 and $160. Having made the call on the money I will now tell the world that a lot of this game is luck, but that’s all I thought it was worth.

Why two rights? One of our brighter commentors, Beltway Greg had pegged Apple around $200 a year out and it made the number in December 2007 long before even he thought it might and I gave him credit at the time. I was looking farther out and as the current price evidences I was correct also. But what’s wrong with this picture? When I wrote, I tried to figure what I thought the stock was worth as did Greg.

The difference is he simply figured investors would be willing to pay a much higher multiple. For myself, I thought this story may be getting a tiny long in the tooth and the economy would have a lot of question marks.

Apple’s P/E ratio has come down to about 30 which I think is still a tad high but I have the ability to live with it. However, Greg is looking for the stock to be $260 this December and there I think he’s wrong. I think earnings will slow somewhat, as Apple itself has projected, and this time I don’t think it is underplaying market expectations (so that it can then top them by a penny and still win). From my perspective Apple will remain under $200 this year and might add $10 to $15 from here but will not be worth much more.

My colleague Georges Yared was the biggest Apple bull I know last year, and looked smart to place that bet. However, he also got to excited about last year’s success and posted that Apple will hit $300 this December, which pushed me to post Kiss of death: GOOG $2,000 & AAPL $300.

Apple is still making good money and the 3G iPhone is selling out. It is still back-ordered at our local AT&T Stores. Perhaps Apple even might introduce some great new products by year’s end, in which case all bets are off. But for now I would not look for much more than Apple itself has projected.

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 don’t own shares of AAPL.

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Filed under: Products and services, Whole Foods Market (WFMI), Commodities

“Shawn Hebb may have one of America’s toughest jobs: convincing people that Whole Foods Market Inc. (NASDAQ: WFMI) can be an economical place to shop,” according to The New York Times. I would beg to disagree. His job is the toughest, even harder than John McCain’s campaign manager or Michael Vick’s PR consultant.

Hebb is the guy who gives tours of America’s most uptight grocery chain to convince shoppers that they do not necessarily need to spend $10 for an apple. How bad are things at Whole Foods that the company needs to teach people how to shop?

Whole Foods, down 48% this year, also may be a victim of its own success. Even my humble neighborhood grocery store offers a pretty good selection of organic goods such as Earth’s Best baby food and Kashi cereal. I even bought some wild Alaskan salmon on sale a few weeks ago. Why on earth would I need to make a special trip to Whole Foods or any other upscale grocery chain given high gas prices.

Even more troubling, according to The Times, is that interest in organic food is leveling off. This leaves Whole Foods in a real organic pickle. “…a big question for Whole Foods is whether even its core customers will continue to pay prices like $6.99 a pound for all-natural, air-chilled chicken breast or $12 for a bag of cherries,” the Times says.

Many customers are probably saying goodbye to Whole Foods and hello to Wal-Mart Stores Inc. (NYSE: WMT).

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Filed under: Housing, Recession

During the roaring 1990s, it was called ‘merger Monday’ — due to the plethora of corporate mergers announced on the day, driven by the robust U.S. economy.

In the current sluggish (or perhaps worse) U.S. economy, it’s becoming known as ‘morbid Monday’ — due to the spate of unpleasant predictions publicized on the day.

Oppenheimer analyst Meredith Whitney filled the August 4 installment of the latter by predicting that housing prices will fall more than 30% and banks will remain reluctant to lend until the credit crisis wanes, CNBC reported Monday.

To be sure, the housing sector is a jumbled, uncertain morass, so in order to provide some clarity on the sector (and to either confirm / refute several conventional wisdom points), BloggingStocks Monday corralled economists Peter Dawson and David H. Wang.

Point 1: Those states hardest hit by the housing sector, California, Florida, Nevada, will be the first to recover.

Dawson: Not true. Wang: Most un-true.

“You may find a $300,000 or $350,000 bargain in California or Florida, but comprehend that five years down the road that home might be roughly the same price in real terms, after inflation,” Wang stated. “Job creation in an area will determine which way home prices are going in a region in the years ahead, much more than how bad the local housing market is now.”

Point 2: Since housing prices have dropped, it’s a buyer’s market.

Dawson: That’s a half-truth. Wang: A half-truth.

“In general, lower home prices, and the big inventory of homes give the advantage to the buyer, but they also increase the buyer’s equity risk, and that’s something you don’t hear realtors speak too much about,” Dawson stated. “Prices are lower now, but keep in mind prices are likely to fall even more, in most regions of the country. So if you buy now but have to sell in two or three years due to a relocation, you might end up losing a great deal of money. I would not purchase a home now unless I completely needed the space, for example for a growing family.”

Point 3: If my house, or the home I want to purchase, is the ideal home in the neighborhood, I’ve more protection against a decline in housing prices.

Dawson: Not true. Wang: Not true.

“While it’s true the best home on the block generally starts with the highest value, it isn’t true that the ideal home is more protected against price declines,” Wang stated. “The ideal house could end up losing more value, in percentage and absolute terms, than the median home on the block, because its price contained a larger bubble, a bigger, artificially-high price, due to the wealth effect of the recent housing boom.”

A good rule of thumb for potential home buyers? Wang and Dawson concurred that, if you’re able to postpone a home buy, potential home buyers should monitor the price of homes in three or four areas where they’d like to buy. Track monthly sales prices of houses similar to those you’ve selected. If prices continue to fall, don’t buy. If / when prices are flat or rise for three consecutive months outside the summer months, the market may have turned, or at least flattened, making the home buy less-risky in that area, from a return-on-equity standpoint.

Housing Sector Analysis: Onto the pertinent, prudent advice from economists Dawson and Wang, I’ll simply underscore that home buyers / sellers should monitor job creation and economic conditions in their area. If a large employer(s) is closing an office or factory, this is not a good sign for local home prices. Conversely, if a big employer announces an expansion of hiring, this is a good sign.

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Filed under: International markets, Forecasts, Good news, Economic data, Housing, Recession

BNP Paribas, which helped signal the global credit crisis that started one year ago this week, has emerged from the credit crunch as France’s healthiest bank, Bloomberg News reported Monday.

BNP Paribas will announce Q2 financial results this week. While earnings are expected to be lower year-over-year, they’ll probably be superior than those of its rivals, Societe Generale SA and Credit Agricole SA, according to Bloomberg. BNP Paribas fell 1.76 euros to 59.77 euros in Monday afternoon trading in Paris.

About a year ago, on August 9, 2007, BNP Paribas halted withdrawals from three funds that invested in subprime mortgage debt. The bank’s announcement proved to be the first of dozens credit-loss and write-down announcements by banks, mortgage lenders and other institutional investors, as subprime assets went bad, due to defaults by subprime mortgage payers.

The losses and resulting credit crunch compelled the intervention by the world’s major central banks. The U.S. Federal Reserve, European Central Bank, Bank of England, Swiss National Bank and Bank of Canada made hundreds of billions of dollars available in specialized loans through conventional monetary policy tools and via new, special ‘facilities,’ in an effort to maintain credit market liquidity and prevent bad bank/mortgage lender business models from undermining healthy sectors and the broader economies in the United States and the European Union.

Economic growth is the major concern this day

London-based economist Mark Chandler told BloggingStocks Monday that concern about credit markets freezing up again has diminished, but concern about the impact of the housing sector’s slowdown on broader economies has not.

“By and large we have the ability to judge the Fed’s, the ECB’s and the Bank of England’s intervention as a success, from a liquidity standpoint, and BNP Paribas’ continued function is proof of that,” Chandler stated. “The Fed and the ECB used existing tools, and when needed devised new tools, such as the Term Auction Facility, to keep markets functioning. The pervasive fear that gripped the markets last year is gone. Still, there’s no denying the economic impact of the housing recession. It will take about 0.5-0.7% off the EU’s GDP and about 1.0-1.2% off the U.K.’s GDP in 2008.”

Further, Chandler said data he’s reviewed suggests the U.S. will need “at least two of three more quarters” to work-off excess housing inventories. Moreover, given the lack of stimulus from the housing sector, that would place the begin of U.S. recovery “at end of Q1 2009 at the earliest,” he stated, which will also delay a recovery in the United Kingdom.

Economic Analysis: A modest bit of good news from BNP Paribas. The data point confirms that markets remain liquid and functioning, and that the worst of the write-downs in the financial services sector is behind us — famous last words. That stated, the drag effect of the housing sector’s recession will continue for at least another 2-3 quarters, as economist Chandler outlined, and perhaps longer. Combined with high energy prices, that might compel a second U.S. fiscal stimulus bill, or some other mechanism to jump-start demand, if business investment does pick up in the immediate quarters ahead.

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Filed under: Earnings reports, Forecasts, Economic data, Housing

It was just a matter of time. People with poor credit have been defaulting on mortgage payment in huge numbers for more than a year. Now the problem has moved to homeowners with reasonably good credit.

According to The New York Times, in April “delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent” from a year earlier.

The problem is going to get much, much worse. Many mortgages held by people with good credit have interest rates resetting at higher prices. The trouble is deeper than that. Higher energy costs and falling employments have a leveraging effect on the overall capability of many homeowners to keep up with their payments.

All of this means that write-downs of asset by large banks and brokerage firms may only be in early stages. The IMF has estimated that total write-offs among banks due to mortgage problems will hit $1 trillion. By most estimates only $400 million of that has shown up in earnings reports.

For investors in bank and brokerage stocks, the implications are that these firms will lose more money and have to raise more capital to bolster their reserves. That means more dilution.

Bank stocks have much further to fall.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Industry, Market matters, Federal Natl Mtge (FNM), Wachovia Corp (WB), Housing, Cramer on BloggingStocks

TheStreet.com’s Jim Cramer states Rich Pzena has a different take on the value of the beaten-down financial sector.

If you think the world is coming to an end, you might as well read Rich Pzena’s note from Pzena Investment’s (NYSE: PZN) (Cramer’s Take) earnings call — he talks about how the world just might not be ending.

Rich has done excellent work his whole career and, in full disclosure, is a friend, and I don’t seek out or have many friends on Wall Street. It makes the job — telling the truth as I see it — a tiny too hard.

Anyway, Rich has been wrong, or early, or whatever you want to call it, on the financials. Someone like Doug Kass, who has been dead right on the financials, might take umbrage to my even mentioning Rich’s work, but Rich deserves respect for his unbelievably great work over the years.

I liked his conference call because no punches were pulled. He just admitted plain up that his quarter was awful, just terrible, as befits a money management company that invests in value, which now means the financials.

What I liked about what Rich wrote is that he states people forget that when they read about the obligations that Fannie Mae (NYSE: FNM) (Cramer’s Take) and Freddie Mac (NYSE: FRE) (Cramer’s Take) have, they see the $5 trillion number and they freak out, but he reminds you that there is $7.5 trillion in home equity backing up those obligations, and the vast majority of it isn’t going away. Not only that, but he reminds us that if each single regulator states that FNM and FRE are well capitalized, then what are you scared of, given that they’re the ones — not the media or the shorts — that determine if more capital needs to be raised?

OK, those are his main points beyond pointing out the franchise values of outfits like Wachovia (NYSE: WB) (Cramer’s Take). I don’t concur with Rich; I think regulators say one thing and then can do another, and Fannie’s and Freddie’s losses will be horrendous.

I simply point it out because, well, no one else is, and I thought it was fair to hear what the lonely financial bulls are saying about their now-slaughtered herd.

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RELATED LINKS:
Coming Week: Searching for Clarity
Good News on Reverse Mortgages
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Filed under: Before the bell, Earnings reports, Apple Inc (AAPL), Time Warner (TWX), Ford Motor (F), General Motors (GM), Market matters, Citigroup Inc. (C), Economic data, Oil, Housing, Federal Reserve

Stock futures were lower Monday morning ahead of a wave of economic data, a tropical storm and, most important, the Federal Reserve meeting and decision Tuesday.

Before the opening bell, the economic calendar includes personal income and spending data for June, as well as the core PCE deflator, an inflation gauge the Federal Reserve eyes closely. Factory orders for June are also due after the open. Oil prices were steady near $125 a barrel Monday as the market kept on eye on both tropical storm Edouard that could turn into a hurricane and hit oil facilities in the Gulf of Mexico, and on further developments in Iran. But most of trading today will likely be affected by expectations the Fed will not change interest rates Tuesday, and issue a neutral statement with the focus changing to the weak economy.

Bank troubles aren’t over. HSBC Holdings PLC (NYSE: HBC) reported a significant profit drop as costs for bad U.S. mortgage loans mounted. “HSBC Chairman Stephen Green said the first half of 2008 saw one of the most difficult financial markets for decades.” As long as the housing market slump continues, and before the bottom can be seen, no doubt the financial sector will continue to suffer. And given that only about 40% on the $1 trillion expected writedowns were taken, the challenges for financials are far from over. For now, HBC shares are dropping about 3% in premarket trading.

From one ailing sector to another: vehicles. Chrysler stated on Sunday that its financial unit had been able to renew only $24 billion of the $30 billion credit lines, or short term debt it has with banks, coming up $6 billion short. Not only does Chrysler need the capital for its operations, it will also pay more for what it managed to get. The obvious question then is what will happen if — and some would say when — Ford (NYSE: F) and General Motors (NYSE: GM) will face the same problem. Following the dismal July U.S. sales the Massive 3 reported Friday, and GM’s massive loss, how long can they keep going?

The British Daily Mail site claims Apple Inc. (NASDAQ: AAPL) “is about to launch a ‘nano’ version of the hugely successful iPhone. It is expected to be in the shops in time for Christmas.” Without any sources provided, while this stories has been making the rounds on the blogosphere, it doesn’t sound reliable. It also doesn’t make much sense to have an iPhone nano — what would be the benefits of such a device, and where would Apple “cut,” or what features it would take out to make the phone smaller. And most importantly, why? Can’t be because of the price, the iPhone is priced aggressively as it is. If the iPhone nano is just a phone added to the iPod nano, then the iPhone would lose much of its very special positioning. It would definitely be interesting to see the results of such a scale down if the rumors are true.

The Wall Street Journal stated over the weekend that Time Warner Inc. (NYSE: TWX) “has finished the internal work necessary to separate its AOL unit’s dial-up-access business from its advertising and content business,” and that the media giant will likely announce it Wednesday, same day it is reporting quarterly results. It might sell one or both of the businesses since AOL has been a drag on Time Warner’s stock with the uncertainties surrounding the prospects for its ad-based business, the Journal stated.

I started with banks, I’ll end with banks. Citigroup Inc. (NYSE: C) “is closing a $400 million convertible arbitrage fund, the final step in winding down its $2 billion Tribeca Global Investments group,” Bloomberg reported. Citigroup has been struggling due to losses from the subprime meltdown and has troubles with its alternative-asset management unit. It has already closed Old Lane Partners and started closing its Falcon Strategies hedge funds after suspending redemptions. Until Citigroup can show it has its home in order, the stock, already down 36% year-to-date will likely continue to suffer.

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Jane Q. Public writes “According to Ars Technica, the ashes of James Doohan, who played “Scotty” in the original ‘Star Trek’ series and several movies, were aboard the SpaceX III launch and were lost when the launch vehicle failed.” Which totally wouldn’t have happened if Scotty was the engineer.

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