We've got it all in this week's mix tape: a couple of Christmas carols, a classic-rock favorite, even a little hip-hop. Tune in and make sure you didn't miss any of the big happenings in the market last week.
"I'll Be Home for Christmas," as performed by Bing Crosby and Texas Instruments
More workers from TexasInstruments'
The company blamed some of the weakness on the sales mix from chip sales for cell phones. Cell phone customers ordered more of TI's lower-end chips during the quarter, which have both a lower selling price and slimmer profit margins. Ron Slaymaker, from TI's investor relations department, didn't paint a particularly pretty outlook for the following quarter, either, saying that it doesn't look like things have bottomed out quite yet.
Investors didn't appear to be caught off guard by the announcement, and the stock even rose 1.6% the following day. It's likely that the market was prepared for some disappointing news from TI after lackluster announcements from some other industry bellwethers -- National Semiconductor
"Rock Steady," by No Doubt and the Federal Reserve
For a fourth straight meeting, Ben Bernanke and crew decided to hold the Federal Reserve's target federal funds rate steady at 5.25%. In a statement released Tuesday, the Fed indicated that the housing market was having a "substantial" effect in slowing economic growth, though the Fed expects that we will see growth "at a moderate pace on balance over coming quarters." Using similar language to previous statements, the committee noted that inflation is still a primary concern, and it wouldn't rule out raising rates again if needed.
Despite the Fed's hawkish tone in the statement, investors have been preparing themselves for a cut in rates, if anything. Though this sentiment may have tempered over the last month, federal funds rate futures data from the Chicago Board of Trade still suggests that any rate change will likely be a downward one. More detail on what the Fed thinks about the economy's current situation will come to light in a few weeks, when the Fed releases the minutes from this most recent meeting.
"We Fly High," by Jim Jones with the Airline Industry Choir
The excitement in the airline industry continues. This past week saw reports surface that United Airlines parent UAL and Continental Airlines have been in merger talks for several months; AirTran made an offer to purchase small-fry Midwest Air; and Qantas accepted an upped bid from a private equity consortium led by Macquarie Bank and Texas Pacific Group. In addition, there's still the existing US Airways bid for Delta on the table.
While the bid for Delta is primarily intended to take advantage of increased potential synergies as Delta emerges from bankruptcy, the rest of the action among the airlines is more along the lines of good old consolidation. The last five years have been particularly turbulent for airlines, as decreased traveling after the Sept. 11 attacks kept seats empty, and rising gas prices pushed airlines' bottom line further into the red. Now, with travelers back out and about, and gas prices moderating, airlines are poised to turn up the profitability in the coming year.
If the airlines are successful in tightening the screws financially, investors could respond by giving them multiples more in line with players such as Southwest
"Both Sides Now," by Joni Mitchell, Ben Bernanke, and Wu Yi
Nobody expected that last week's economic talks with China would be a cakewalk for the U.S. delegation, but with anchor Ben "The Bull" Bernanke leading the group across the Pacific, no one expected that they'd dance around the issues. Before leaving last week, Secretary of the Treasury Henry Paulson made it very clear that the delegation was keeping expectations low regarding the talks' potential achievements. Though he didn't believe that two days' worth of discussions would lead to major action on the part of the Chinese government, he did stress the importance of an ongoing dialogue for the sake of any sort of achievement.
In a keynote speech that kicked off the visit, Vice Premier Wu Yi painted a picture of misunderstanding. She argued that the United States' distaste for some of China's policies stems mostly from an insufficient understanding of the economic and social challenges within China. She claimed that these issues, including poverty and the masses of rural residents flocking to China's cities, are key reasons why China is taking its time in liberalizing its economy.
The U.S. delegation expressed understanding for Ms. Wu's views, but pushed ahead in expressing the areas that they believe need to top China's to-do list. In particular, a speech toward the end of the conference by Bernanke praised the Chinese for the lengths that they had gone to so far in opening up markets within the country, but emphasized the importance of furthering that process, making markets such as capital and energy more open.
Digging in deeper, Bernanke spoke at great length about Chinese monetary policy and the potential pitfalls of continuing to artificially peg the yuan to the dollar. Such a policy kept the yuan, as Bernanke put it, "undervalued." This issue has been a touchy one for U.S.-Chinese relations, as many believe it gives China's businesses an unfair competitive advantage over U.S. firms. Reaching some middle ground on this issue is likely a near-term must, since many U.S. states are mulling legislation that will try to level a playing field they see as tilted too far east.
"White Christmas," by Bing Crosby, John Mack, Lloyd Blankfein, Richard Fuld, James Cayne, and Stan O'Neal
You could say that it's going to be a green Christmas for the heads of Wall Street's top shops, but given the kind of money these guys are taking home, it'll probably be whatever color Christmas they want. With record profits rolling in on Wall Street this year, massive, jaw-dropping bonuses are certain to follow.
Morgan Stanley's
Despite the distaste swirling around among investors regarding CEO compensation, Wall Street seems somewhat immune. The brokerage houses have a very strong pay-for-performance attitude -- when you do well, you'll get paid mightily. Of course on Wall Street, this doesn't stop with the CEO; though not everyone is making $40 million, traders, bankers, and money managers alike see hefty bonuses coming their way when they put up big numbers during the year. For those writing the checks, the equation is simple: You either pay the trader who's bringing millions into your company, or lose that valuable employee to a rival firm willing to stuff his or her stocking with a greater amount of goodies.
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Fool contributor Matt Koppenheffer owns shares in Goldman Sachs, and he wouldn't turn down a dinner invitation from ol' Lloyd to celebrate his huge bonus. He does not own shares of any of the other companies mentioned. The Fool's disclosure policy is always flying high.
