The New York Stock Exchange (NYSE) has revoked the credentials of two Al-Jazeera journalists who previously had access to the exchange floor.
A spokesman for the NYSE stated it had heightened security concerns and was limiting access to the trading floor to journalists engaging in "responsible business coverage."
The tone of Al-Jazeera's coverage and its decision to broadcast interviews with American soldiers taken captive by Iraqi forces has left plenty of room for U.S. indignation with the independent, Qatar-based news organization. But the happenings of our markets are an enormous component of the war coverage, and it goes against every bit of the spirit of free press to bar Al-Jazeera.
Bill Mann has a strong take on the matter today, for those interested.
In today's Motley Fool Take:
- No Credit for Sears
- Quote of Note
- Not-So-Durable Goods
- Shameless Plug: Get More From Your Savings
- Fight Fair About Money
- Discussion Board of the Day: Red Hat
- Quick Takes: Novartis, HealthSouth, Pfizer, more
- And Finally...
It's the latest attempt to right its business and stock, victim to a Sears sale from last June's high-50s to yesterday's $21.45 close. Yet the company's pretty press release leaves even our heads shaking. If the business is "extremely attractive and highly profitable," why sell it?
Please. Sears faces the credit-world version of 'live by the sword, die by the sword.' The ancient retailer joined the crowd during the consumer-spending boom, trying to boost its rusty retail business with heady returns possible from credit cards' often-usurious interest rates. Subprime borrowers -- those with blemished credit and FICO scores below 620 or so -- represented especially ripe targets for carrying balances and incurring fat late-payment fees.
Yet, when the downturn came, more borrowers didn't just miss payments; they defaulted entirely.
Defaults remind lenders of why they call credit card debt "unsecured." Your house secures your mortgage debt, so lenders can always foreclose if you can't make payments or sell the house yourself to satisfy the debt. But to recover unsecured debt, Sears has little recourse other than threatening letters and phone calls. The company can be pretty aggressive in this regard, and has been known to post representatives at bankruptcy courts around the country to ensure it gets onto as many creditor lists as possible.
It's feeling the same pain as Capital One
And there's more to it. Rising defaults mean a company must put aside more cash for loan-loss reserves. Sears' credit card receivables climbed 10% in 2002, but its allowance for uncollectible accounts vaulted 60%. This will decrease the quality of the balance sheet eventually, and may cause the company to violate debt covenants -- conditions of financial health required to get anyone to buy its corporate debt.
And Sears has a lot of that -- $29 billion in short-term and long-term owings, up 70% in the last seven quarters. This albatross must be refinanced or increased from time to time, and Sears' cost is rising.
In January, credit-rating agency Fitch lowered Sears' debt rating from A- to BBB+ (a grade that didn't exist when we were in college), based partly on "revised internal capital allocations for the credit business." That's financespeak for "take off those green eyeshades and squint at all those delinquent borrowers!"
So, in a sad irony, Sears, "the subprime lender," may become Sears, "the subprime borrower." Only in America.
Many investors are circling, believing the retailer offers more potential for a turnaround than Spiegel. Its repair business and savvy $1.9 billion purchase of Land's End are potential growth drivers, but haven't yet roe-bucked (ha!) the company back to shore.
Long run, the brand needs more than average ads to differentiate it from a world of competing department stores, such as Kohl's
Selling the credit biz may help right Sears' business and stock. Investors even liked the idea, raising shares 13% in morning trading. But even a P/E below 5 and a 4.29% dividend don't assuage anxiety about a company that, in 2002, produced no cash from operations and had negative free cash flow of $1.5 billion.
"They never fail who die in a great cause." -- Lord George Gordon Byron (1788-1824), poet
The Commerce Department reported new orders for durable goods dropped 1.2% in February. Durable goods are simply those meant to last at least three years. The number, which matched economists' predictions, was the largest fall since November, and followed a 1.9% increase in January.
However, if you exclude demand for defense goods, which experienced a sharp increase for obvious reasons, orders fell a whopping 2.7%, the biggest slide since September '02. In other words, the government is the only one spending.
Computers and electronic products posted the largest slump since August, tumbling 2.9%, which will likely translate into continued sales weakness at Dell
The economic report is just the latest sign that punch-drunk manufacturers will have to show continued patience as they wait for a sustained recovery.
Not to be outdone, purchases of new homes fell 8.1% in February, their lowest level in more than two years. This represents the second decline in as many months. Debt-laden consumers appear unwilling to commit to such large purchases, despite mortgage rates being at their lowest levels since 1961.
The drop was partly influenced by harsh weather in much of the country, but taking this into account still leaves numbers well shy of forecasts. Consumers purchased new homes at the slowest rate since August 2000, pushing the amount of time homes for sale spend on the market to five months, up from four and a half in January.
Just a few weeks ago, St. Louis Federal Reserve President William Poole spoke of possible interest rate decreases on the heels of weak employment numbers. Considering the Federal Reserve has pointed to an increase in capital spending by businesses as integral to an economic recovery, it will be interesting to see the Fed's reaction to these figures.
It seems we'll also have to be patient, though, as just last week the Fed chose to forego its usual assessment of the threats facing the economy, saying war issues left it unable to say whether risks are more heavily weighted towards inflation or economic weakness.
You can't put all your money in the stock market. Sometimes you need a safe, guaranteed return. So what are your options? Our Short-Term Savings Center can help you figure out how much you need to save, where to put it, and where to get the best interest rates. There's even some special yields for Fools.
In the mood for a money talk? Yeah, we know. It's hardly on the top of anyone's list. But the task does fall somewhere between teaching the kids the birds 'n' bees and remembering to give the dog its heartworm pill.
"Not now, honey. I've got a headache" is just one of the excuses people use to avoid this prickly topic. So, how do you raise the issue, especially with a partner who would rather avoid it, without ruining your weekend?
As couples told us in Couples & Cash: How To Handle Money With Your Honey, it's all about make-up nookie. Just kidding. But a successful money talk must be linked with rewards. One great way to lure a reluctant partner into a dreaded money talk is to relate the topic to something he or she cares about.
Consider how Robert (a "saver") inspired his wife Elizabeth (a "dreamer") to think about budgeting. Elizabeth explains:
I've been itching to plan our next mega-vacation. Robert resisted my enthusiasm, saying that, as new parents, we should focus on more serious things. To get me excited about budgeting (blah!) and saving receipts (ick!), he conceded that we just might be able to save toward another European trip, albeit a few years off. Voila! I am all about budgeting right now.
Think about the goodies that excite you and your loved one. Chances are, some will require a bit of cash to come to fruition.
When you do start talking, consider setting a few ground rules, such as:
- Agree to try -- managing your household finances is a two (or more)-person job.
- Accept equal responsibility for changing your lives.
- Don't play the blame game. No fair bringing up past financial indiscretions. Make this conversation all about setting yourselves up for a sweet future.
- Be honest and realistic about your financial situation.
- Take a break if your conversation becomes heated and unproductive.
Will Red Hat continue to make inroads in the retail market and the corporate-server space? Any Wallace & Gromit fans who can appreciate a Linux joke about a penguin with a red hat? What will be the operating system of the future? All this and more -- in the Red Hat discussion board. Only on Fool.com.
An interesting battle is shaping up in Congress after the Senate voted yesterday to slash President Bush's proposed $726 billion tax cut by more than half. Moderates, led by Sen. John Breaux (D-La.), said uncertainties about the cost of the war in Iraq and the prospect of record budget deficits spurred the proposal. The issue is far from resolved, and the White House vowed to keep pushing for the full tax-cut package.
Internet security experts are battling hackers who attempt to deface websites with anti-war rhetoric. The offenders, dubbed "hacktivists" by USA Today, have defaced "several thousand" sites with slogans and disturbing images. According to one security firm, most of the hacking originates from pro-Islamic activists outside the U.S.
Drug maker Novartis
William Owens, the suspended chief financial officer of health-care provider HealthSouth, pleaded guilty to fraud and conspiracy charges today. The SEC says the company and CEO Richard Scrushy committed massive accounting fraud by overstating earnings by some $1.4 billion over the past few years.
In local news, homemaker Jenny Bright remarked to her husband, Naughtso, "With a name like Scrushy, he has to be good!"
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Buying the Buffett Way: Guest columnist Matt Logan says only swing at what you can hit.
- When choosing a college, Robert Brokamp says make sure the required debt load is part of the calculation.
- Bill Mann asks, should we really shut the Arab world's only independent news agency out of the NYSE?
- Another federal investigation and more restatements for Network Associates.
- Linux software specialist Red Hat approaches black.
- In Fool's School, ways to reduce risk in investing.
Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim
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