At These Levels

Wal-Mart: Greener or Meaner?

bshepherd@kci-com.com (Ben Shepherd) — Thu, 03 Jul 2008 11:14:48 -0400

Wal-Mart (NYSE: WMT) just can't catch a break, not that it really deserves one. It announced plans yesterday to begin selling about $400 million worth of produce grown in the states in which its stores are located, and already it's being bashed.

My feelings on Wal-Mart are much like the DC winds; they blow hot one day and cold the next. But even given their atrocious labor practices, most recently demonstrated by a class action suit in Minnesota, and their hideous environment record despite their greening initiative, my mean temperature is still only cool. And in all honesty, I shop there for basic household goods because its store is convenient and the prices are cheap.

Continue reading "Wal-Mart: Greener or Meaner?"

It's Academic

(Peter Staas) — Thu, 03 Jul 2008 10:58:14 -0400

Remember when college students frittered away their time illegally downloading music and movies from the internet? Apparently, students are becoming, well, more studious.

The Chronicle of Higher Education recently reported that online piracy of textbooks and scholarly works is on the rise; although the ponderous chemistry book may not be the most enthralling read, impoverished students are understandably been captivated by the prospect of saving some dough--especially on their books.

The combination of college students' frugality and overpriced textbooks has transformed the market for used editions to a $2.3 billion industry. And while publishers have long cursed the secondary market for textbooks, they're even more concerned about the "culture of infringement" that is prompting an increasing number of college students to save money by downloading their textbooks illegally.

Although speculation abounds that the fourth installment in the Pirates of the Caribbean trilogy will involve a wily band of students assiduously scanning business textbooks for online distribution, we won't believe it until the mainstream media--for instance, Entertainment Tonight--picks up on the story.

To read Jeffrey Young's article on this emerging problem, click here.

Corner The Carbon Credit Market

bshepherd@kci-com.com (Ben Shepherd) — Tue, 01 Jul 2008 13:11:29 -0400

Global warming is probably one of the most hotly debated scientific
topics of our time, with proponents and skeptics both offering
boatloads of data which can be manipulated to accommodate either side
of the argument. I personally believe global warming is very much a
reality; I just think you can make the data show about anything you
want (hopefully Al Gore doesn't read this blog). One point which isn't
open to debate though is that concern over global warming has created a
very profitable investment trend, though until now the only real way to
play it has been through operations like green tech or solar energy
companies.

That's changed with the recent introduction of the iPath Global Carbon
ETN (NYSE: GRN), part of Barclays PLC's growing line of exchange trade
notes, which began trading on June 25th. It essentially tracks the
market price of European Union Allowances and certified Emission
Reductions credits, created under the auspices of the Kyoto Protocol,
using the Barclays Capital Global Carbon Index as its benchmark. As
such, it essentially allows you profit from the increasing values of
carbon credits and growing trade volumes.

Most investors would immediately assume this would be a risk-free
investment, though that's not entirely the case. For starters, this is
a debt obligation of Barclays, so if it goes belly up, so could the
ETN. Also, being an exchange traded instrument, it is possible for it
to trade above or below its net asset value. And being brand new and
the first of its kind, there's no way of telling exactly how much
interest it will garner or what sort of volume it will achieve.

This isn't an endorsement or recommendation, but it could be an
interesting way to play the warming trend. You can find a report that
Barclays put together on the emissions market here, and a list of all
the ETN products here.

Name Recognition

wrichardson@kci-com.com (Whitney Richardson) — Mon, 30 Jun 2008 13:36:25 -0400

Like designer products but not designer price tags? You may be out of luck: French court decisions brought down today are among the first to crack down on sales of counterfeit products on eBay. The suits, brought against the online retailer by top luxury names LVMH Moet Hennessey Louis Vuitton and Christian Dior, among others, accused eBay of knowingly allowing the sales of imposter products, as well as the illegal distribution of perfumes as a nonauthorized dealer. The decision falls in line with a previous decision this month in favor of Hermes International for similar practices.

LVMH and Dior were rated among the top 10 luxury names by The Nielsen Co earlier this year, alongside other brand-name designers such as Chanel, Versace and Prada, with Gucci topping the list. The latter issued a warning to eBay to cease sales of counterfeit versions of its products in the wake of LVMH's filing and has since received a win of its own in China regarding trademark infringement.

Cutting Room Floor Capsule

kzanoni@kci-com.com (Kate Zanoni) — Fri, 27 Jun 2008 11:11:25 -0400

Although this capsule wasn't rejected per se, it did find its way onto the Personal Finance cutting room floor.

Billionaire industrialist Anil Ambani is going for the gold. His media conglomerate, Bollywood guru Reliance Big Entertainment, is currently in talks with DreamWorks Studio to finance a new film venture, bringing Indian filmmakers into the Hollywood spotlight.

Steven Spielberg and David Geffen, DreamWorks' two remaining founders, are set to extricate the company from its parent media group, Viacom. If the negotiations are successful, this new creative engine has the potential to reinvigorate moviemakers as well as moviegoers.

The studio system has been crumbling over the years as revenues flat lined, and studio executives realized that paramount growth opportunities lie beyond US borders. Indian film revenues last year totaled approximately $2.2 billion. Up 14 percent from a year earlier, both parties are hoping an Indian presence in Hollywood will spell success, not to mention bigger profits for the slumping industry in the US.

Reliance plans to make an initial $500 million investment and aims to overshadow less-successful, foreign investments of years past, including the formation of previous silver screen flop producer Sony Pictures Entertainment. But unlike his predecessors, Ambani has already aligned himself with arguably the most successful filmmaker of all time. Linking globally and repatriating, a Reliance/DreamWorks alliance would have the potential to take the No. 1 spot as the industry's most bankable studio.

2008 World Wealth Report -- Rich People Like Expensive Stuff

(Peter Staas) — Thu, 26 Jun 2008 13:19:56 -0400

Merrill Lynch and Capgemini released their print equivalent of Lifestyles of the Rich and Famous, the 2008 World Wealth Report. This year's edition found that the population of high net worth individuals (HNWI)--i.e., people with over US$1 million in financial assets--grew to 10.1 million individuals worldwide, with Brazil, India and China making up for slackening HNWI growth in more mature markets.

Although the study found that HNWIs' portfolio allocations favored lower-risk investment vehicles in the latter half of 2007, macroeconomic pressures failed to curb their appetite for so-called "passion investments"--for example, jewelry and other luxury collectables. (Please note that more literal passion investments such as mistresses or trophy wives/husbands were not included in this category).

"Fine" art retained its position as one of the top passion investments among HNWIs. As in previous years, higher percentages of European (22 percent) and Latin American (21 percent) HNWIs invested in art than their North American counterparts (11 percent). Wealthy Russian collectors, in particular, were a boon to Sotheby's and Christie's International, which tallied a combined $324.9 million in sales to Russian clients.

Curious to find out more about how the other half invests? Check out the full report here.

The Nanotech Hype Cycle

wrichardson@kci-com.com (KCI Editor) — Thu, 26 Jun 2008 12:06:23 -0400

By Dr. Tim Harper

Some years ago, the Gartner Group developed a concept known as the "Hype Cycle" that followed five steps and went something like this:

1. Technology Trigger

The first phase of a Hype Cycle is the technology trigger, or breakthrough, product launch or other event that generates significant press and interest.

2. Peak of Inflated Expectations

In the next phase, a frenzy of publicity typically generates over enthusiasm and unrealistic expectations. There may be some successful applications of a technology, but there are typically more failures.

3. Trough of Disillusionment

Technologies enter the trough of disillusionment because they fail to meet expectations and quickly become unfashionable. Consequently, the press usually abandons the topic and the technology.

4. Slope of Enlightenment

Although the press may have stopped covering the technology, some businesses continue through the slope of enlightenment and experiment to understand the benefits and practical application of the technology.

5. Plateau of Productivity

A technology reaches the plateau of productivity as the benefits of it become widely demonstrated and accepted. The technology becomes increasingly stable and evolves in second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only a niche market.

Continue reading "The Nanotech Hype Cycle"

The Mortgage Industry's Changing Face

(Peter Staas) — Wed, 25 Jun 2008 11:23:29 -0400

Anyone who reads the financial pages is well aware of the mortgage industrys struggles, and the oft-cited statistics bear testament to a pervasive lack of oversight and due diligence at all levels--from mortgage brokers and lenders to regulators and secondary market investors.

Lax underwriting standards and an emphasis on volume rather than quality have led to over $380 billion in mortgage-related write-offs thus far, and some analysts have forecast even more losses.

According to the Mortgage Bankers Association, roughly 2.47 percent of mortgages were in foreclosure during the first quarter of 2008, up from 1.28 percent a year ago. Another 6.35 percent of borrowers were delinquent in their monthly mortgage payments over the same period, up from 4.84 percent last year.

And many analysts expect loan performance to deteriorate even further, as record declines in home prices--especially in formerly overheated markets such as Dade County, Florida, and Maricopa County, Arizona, and economically depressed areas in the Midwest--are preventing many overstretched borrowers from refinancing into more favorable terms. In some cases, price declines have been so precipitous that homeowners find themselves underwater--that is, in a situation where they owe more than their homes current market value.

Needless to say, the industry has endured a significant contraction as the secondary market for private-label mortgage-backed securities (MBS) has virtually disappeared. In fact, whereas $76 billion of MBS were issued in the third quarter of 2007, this figure dwindled to a mere $6 billion in the first quarter of 2008.

These dire numbers are likewise reflected in analysts forecasts for originations over the next two years: The Mortgage Bankers Association expects annual loan production to decline by 18 percent this year and 27.2 percent in 2009, as compared to 2007.

Perhaps one of the most fascinating developments from the subprime
meltdown has been the resurgence of mortgage lending among community
banks.

Continue reading "The Mortgage Industry's Changing Face"

Ticketmonster No More?

wrichardson@kci-com.com (Whitney Richardson) — Mon, 23 Jun 2008 16:14:32 -0400

Increased competition in ticket sales appears eminent once Ticketmaster spins off from InterActiveCorp (IAC) and its arrangement with Live Nation, the world's largest venue owner, comes to an end in 2009. Although the company will certainly still be a major piece of the ticketing pie, its stronghold over the industry will likely loosen as Live Nation begins ticket sales of its venues separately.

Live Nation has made headlines this past year with its exorbitant, multi-million-dollar marketing deals, or "360 deals," with megastars such as Madonna and Jay-Z for not only their concerts, but merchandising and record sales rights as well. Although revolutionary, these deals have also been a bone of contention between the company's CEO and chairman and recently cost the latter his job because of his overeagerness to execute such plans. Nonetheless, they still offer Live Nation a great opportunity for growth going forward as the company continues to latch onto new trends in the industry.

But rather than attempting to directly compete with Live Nation, Ticketmaster expects its main growth to come from ticket resales, in which it will end up going toe to toe with online resaler StubHub, a subsidiary of eBay, to which it lost resale rights to Major League Baseball tickets last year. (No doubt its suit against another professional sports team, then-client the Cleveland Cavaliers, played a role.) The company recently acquired exchange sites TicketsNow and GetMeIn! and plans to promote increased use of its online ticketing site in order to stay on top of the game.

Ticketmaster has long been criticized for its near-monopoly of the ticketing industry, most often because of sky-high service fees and lack of competing companies. However, as online retail has become increasingly popular, more and more sites have begun to crop up, from StubHub to Flash Seats and other smaller companies. Without the likes of major clients such as Live Nation or additional artist deals of its own, it's hard to imagine how Ticketmaster will maintain its previously strong footing in this industry.

Is Your Parahippocampal Gyrus Functioning Properly?

kzanoni@kci-com.com (Kate Zanoni) — Fri, 20 Jun 2008 14:18:37 -0400

"What on Earth is that?" you ask. It's the gray matter region of the human brain that surrounds the hippocampus in the temporal lobe, and it's making headlines for its important role in social interaction.

As it turns out, Charles Darwin may have missed a key element in his "survival of the fittest" evolutionary theory: sarcasm. Or perhaps his scientific intelligence didn't fully translate into social acumen. Besides playing an integral part in memory encoding and retrieval, the parahippocampal gyrus is the part of the brain responsible for sarcasm, a crucial component of social relations.

Is sarcasm really that vital to communication? Just as human relationships are essential to survival, so is sarcasm to making--or breaking--amities.

So the next time you berate someone for his/her snide remarks, just remember: Some of us are more evolutionarily apt than others.

Whiskey Ventures East

wrichardson@kci-com.com (Whitney Richardson) — Fri, 20 Jun 2008 12:21:20 -0400

As developing countries continue to emerge onto the international scene, so do their middle class, providing some US companies a chance to expand their customer base. More specifically, makers of US whiskeys such as Jack Daniels and Jim Beam (my personal favorite) are working their way into the Chinese and Eastern European markets as attractive alternatives to the more popular Scotch and Irish whiskey varietiesespecially among the younger crowd, through which these companies enjoy the additional draw of the Western image associated with their brands.

Of course, with the move to new markets sometimes come cultural changes as well. Jack Daniels and green tea? Who knew.

A Countrywide Problem

(Peter Staas) — Thu, 19 Jun 2008 10:19:32 -0400

Who's the real estate mogul that has over 14,000 properties for sale across the US? Countrywide Financial.

To keep tabs on Countrywide's foreclosures both in aggregate and on a state-by-state basis, check out the Countrywide Foreclosures Blog.

Pride or Prejudice?

bshepherd@kci-com.com (Ben Shepherd) — Tue, 17 Jun 2008 18:50:13 -0400

InBev's proposed acquisition of Anheuser-Busch has become political; whether as a matter of national pride or national security remains to be seen. Most would argue the former, but I believe, and I think most enjoyers of domestic brews would agree with me, the latter is the better reason. While I'm going to take some flack from the beer-snobs in the office, there's nothing better than spending a hot summer day outside sipping on a hopsy rice brew.

Sen. Claire McCaskill, the Missouri Democrat, has reportedly told Carlos Brito, InBev's CEO, that she's against the deal and will do anything she can to oppose it. That makes sense from the standpoint that all politics are local and the locals are upset by the proposed buyout given Anheuser's very active involvement in the local community. When the news of the proposal first hit the wires, I actually heard a story on NPR where local St. Louis-ites were singing Anheuser's praises for donating kegs for church picnics and pumping money hand over fist into local charities.

Continue reading "Pride or Prejudice?"

It's Like, So Green

kzanoni@kci-com.com (Kate Zanoni) — Mon, 16 Jun 2008 15:33:13 -0400

"It's like a future machine, but it's not." That's actress Laura Harris' oh-so eloquent take on Honda's new zero-emission, hydrogen fuel cell (HFC) car, the FCX Clarity. The vehicle rolled out of production in Japan earlier today, and it's headed for SoCal, where Hollywood A-listers are already gushing over the latest green-tech breakthrough.

The aptly-named Clarity runs on hydrogen and electricity, emitting only water. And with twice the energy efficiency of a gas-electric hybrid and three times that of standard gasoline modes of transportation, it's making waves around the country as earth-friendly technology becomes increasingly more popular amid global warming concerns and staggering gas prices.

But don't expect to purchase one of your own green machines any time soon. Honda plans to release only a few dozen this year and an additional 200 over the next three years. The Hollywood elite will be among the lucky few proud owners starting in July before the fuel cell model is mainstreamed for the general public.

The reason for its trickle into the auto world: hydrogen fuel stations are few and far between. There are only 61 around the country, 25 of which are in California. Compare that to the country's 180,000 gas stations and you have the impetus for HFC rarity.

When can we mere mortals expect to join the exclusivity? The truth is, these hard-to-get vehicles will remain just that. They're not set for mass production until 2018 at the earliest, and that's only a tentative target date.

As for Laura Harris' car review skills, perhaps she should stick to acting.

A Change of Pace

(Peter Staas) — Mon, 16 Jun 2008 12:33:33 -0400

Harry Partch was not your typical composer. A pioneer of microtonal music theory and practice, Partch conceived of and fashioned a wide array of instruments in his efforts to articulate his unique musical vision. How unique? At the height of the Great Depression, wanderlust and financial exigencies compelled him to adopt the hobo's lifestyle, riding the rails and taking sporadic work where he could find it. The sights and sounds of Partch's hobo years, which he recorded in a journal called Bitter Music, would form an integral part of his later work; for example, the composition Barstow centers around text taken from some striking graffiti that Partch saw in the eponymous Californian town, while the music and vocal elements in US Highball incorporate found letters and snippets of overheard speech during his time on the rails.

Now, thanks to American Public Media's American Mavericks series, you can see and play some of the instruments--from the "Ptolemy" to a percussion device called the "Spoils of War"--used in Partch's best-known work, Delusion of the Fury. To pound away on the "Gourd Tree with Cone Gongs" or pluck the "Surrogate Kithara," click here.