k

There was a bit of a move up in the market today, but there was very little news to push sentiment one way or the other. Traders are too tired from the beating they have taken since Memorial Day.

DJIA : 11,504.87 +0.81%
NASDAQ: 2,382.46 +0.87%
S&P 500: 12.81.63 +0.8%
10 Year Bond 3.772% -0.0120
52-Week Lows

Short interest figures for stocks traded on both the NYSE and Nasdaq were released yesterday: Short sellers jumped out of both financials and big tech, signaling a possible turn up in those sectors.

Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) continued to rally, extending hopes they will not have to be bailed out by the government and that common shareholder will not be crushed. Late in the day Freddie was up 17% and Fannie 12%.

Very few companies had a decrease in the size of their shares sold short as Intel (NASDAQ: INTC) had. The numbers compare data from July 31 with figures from August 15.

The change is a bit odd because Intel's shares trade in the middle of their 52-week price range, changing hands at $23.15. So far this year, the company's stock price is down almost 15%.

There is evidence that PC sales are growing. Hewlett Packard (NYSE: HP) recently announced earnings. Its computer business did well, especially in Asia. Apple (NASDAQ: AAPL) cannot build enough Macs. All of that may mean that the market undervalues Intel's potential earnings over the next few quarters.

Intel is also picking up market share from smaller rival AMD (NYSE: AMD), which is struggling with a large debt load. If the AMD situation worsens, Intel is likely to get a significant benefit.

Some investors may also be willing to bet that Intel's move into chips for small portable devices, little computers slightly larger and more powerful than cellphones, will pay off.

Whatever the reason, the gambles that Intel's stock will fall are falling themselves.

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

Every time the FDA turns around, a few more people have died from the diabetes drug Byetta, a product developed and marketed by Eli Lilly (NYSE: LLY) and Amylin Pharmaceuticals (NASDAQ: AMLN). It has to make one wonder how the regulators spend their spare time.

According to The Wall Street Journal, the two companies "disclosed the deaths of four patients taking the diabetes drug Byetta that had been previously reported to regulators but not yet made public." The drug has already killed two people previously, at least.

Lilly and Amylin said they were a bit slow coming forward with the news because they wanted to "provide context" and "avoid confusion" in the future. That is double talk for the two companies not wanting to say anything at all. Dead is dead and there is no way of getting around that.

Why the FDA has allowed the drug to stay on the market is anyone's guess.

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

No one wants to own a gas station; the margins are too small. Consumers will only pay so much for petrol. If the price moves up, people begin to ride bicycles.

ConocoPhillips (NYSE: COP) will sell the last 600 stations it owns, walking away from a business that Exxon Mobil (NYSE: XOM) left just a few months ago. According to The Wall Street Journal, "ConocoPhillips is expected to sell the remainder of its 600 company-owned gasoline stations to closely held PetroSun West LLC for $800 million."

The announcement says a great deal about the perverse economics of the oil business. Due to the recent rise in oil prices, pumping oil out of the ground is an excellent business. The profits on $120 crude are stupendous. But the refining industry is awful. Trying to make margins on the gas and diesel from that high-priced oil is extremely difficult. Demand gets hammered by the consumer's inability to absorb the huge increase in fuel prices.

The question, of course, is why any company would get into the business. That says a great deal about the big oil company strategy of dumping stations. Either the people buying them are fools, or the profits in the sector will come back as gas prices drop. If so, Big Oil will look silly.

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

From the end of March to the end of June, problem banks, as they are defined by the FDIC, rose from 90 to 117. These are banks with a high percentage of "non-current" loans.

The trouble is that the agency may not have enough money to cover the possible upcoming bank closings. So the FDIC said it "might have to borrow money from the Treasury Department to see it through an expected wave of bank failures," according to The Wall Street Journal.

At least two implication arise from this. The most obvious is that the credit crisis is spreading. More banks are having trouble with mortgage, business and commercial real estate loans. Given the spreading effects of the recession, that is not odd.

The other is the extent to which the taxpayer will be hit because of lax bank management. Money from the Treasury is eventually money from every man, woman and child in the country. But who cares? After bailouts of banks and brokerages and possible help for car companies, what is a few more billion?

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

Honda (NYSE: HMC) is being appropriately praised for building its model line around fuel-efficient cars, as it has for years. According to The New York Times, "No major automaker in America is doing better than Honda, whose sales are up 3 percent for the first seven months of this year in a market that has fallen 11 percent."

Honda did not make big money on SUVs when they were the profitable sector of the market. Now, it is not taking huge losses and has net income that is the envy of Detroit.. But its strategy may be short-sighted, especially outside the U.S.

There is plenty of evidence that SUVs are extremely popular in China, the world's second largest car market. The vehicles also do well in the Middle East and some parts of Latin America. As gas prices increase, so does the temptation for governments in large nations to underwrite the cost of gas as is already the case in China. Because of this kind of policy, oil prices may stay high, but gas prices could drop.

Honda's long-term plan to be the provider of the cars that use the least gas may look good now, but petrol prices could swing down again. Then the company may not look so brilliant.

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

Individual investors and mutual funds are not the only ones who have been burned on the stock price drops at Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). JP Morgan (NYSE: JPM) reported Monday that it has lost $600 million on its investment in the two companies. According to Reuters, the big bank holds preferred stock in the mortgage firms.

The news begs the question of what other banks have similar investments and how much losses from these investments will damage their earnings?

Banks are in enough trouble due to subprime paper holdings, LBO debt and credit card loan pools. Holdings in the mortgage agencies could add enough on the pile to hurt third quarter earnings and cause losses for some firms.

Investors have yet another reason to stay away from bank stocks.

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

China Petroleum (NYSE: SNP) has already announced that its profits were down 71% in the first half. Now PetroChina (NYSE: PTR) is getting ready to report a drop in its profits.

The culprit is China's energy policy, which is hurting investors in the Chinese oil industry. According to the AP, "While other global oil giants are reporting record profits, Chinese government price controls prevent PetroChina and other domestic refiners from passing on higher costs for crude oil to consumers." It is an excellent reason for investors to avoid these stocks.

The central government control of oil profits is a fine example of why China should not have taken many of its large companies private. China needs to keep gas and diesel prices down to control inflation and offer cheap fuel to maintain transportation costs of exports at low levels.

With oil trading around $120 a barrel, the oil refiners in China could actually swing to losses in the second half. China is driving investors out of its most important corporations. PetroChina already trades near a 52-week low. That is likely to get worse.

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

The Apple (NASDAQ: AAPL) iPhone is supposed to be the hottest handset on the planet, but in some parts of the world it has very little appeal at all.

The market in India is teaching Apple a lesson or two. The first is that price is an issue. No matter how much people love the product, there is a point at which the cost is simply too high.

According to MarketWatch reports from India, "The princely sum of 31,000 rupees ($720) for the 8-gigabyte iPhone and 36,100 rupees ($840) for the 16 GB version was too high for even such a cool gizmo." If Apple is going to make any progress in one of the world's largest markets, it is going to have to solve that problem. Otherwise, more reasonably priced products from other phone makers such as market leader Nokia (NYSE: NOK) are going to continue to rule the roost.

The other issue in India is that it has very little 3G infrastructure. That makes the new version of the iPhone less appealing. Apple can do very little to solve this problem, but it does say that there are some limits that even the most popular product can't overcome.

Apple is about to launch the iPhone is Russia and sales are expected to be good there, but the company's goal of getting a quick start in every important market may be thwarted.

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

The Olympics were supposed to be NBC's big profit engine for this year. The unit has been something of a disappointment to parent General Electric (NYSE: GE), but one event could have changed that.

Indeed, NBC's ratings for its Olympic programming seem to have been outstanding and its broadcast revenues for the event may set a record for TV ad income for sports programming.

But internet revenue for NBC's coverage may be remarkably small. According to The Wall Street Journal, "NBCOlympics.com will generate just $5.75 million in video-ad revenue from the Games, according to estimates from research firm eMarketer Inc." Some of the disappointing numbers could come from the decision to run only a modest amount of coverage on the website, but the problem may by much greater than that.

Web video may be a bust, at least from a revenue standpoint. There is more and more evidence that points in that direction. YouTube has certainly been a huge disappointment for Google (NASDAQ: GOOG). Viacom has struggled with making big money off the online version of MTV. Video has done very little to bring extra revenue to Facebook and MySpace.

The problem with selling video commercials on the internet could be that consumers have come to expect that everything online is free. Banner ads and search ads are easy to avoid as there is nothing active or intrusive about them. Video ads often start to play whether the person online wants to see them or not. That may lead to a rejection of the experience altogether.

Making cash on web video may never work. The media companies just don't want to admit it.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Gas prices dropped another 15 cents over the last two weeks. That news sounds good, but it really isn't. Gas is still much too high and is staggering compared with a year or two ago. According to the AP, a gallon of regular is down to $3.70, and premium is $3.95.

While the improvement would seem to be good for the economy, gas prices are still just too high. Filling the tank on an SUV or pickup is probably a $70 ticket. Even a small, fuel-efficient car can't stop at a service station for much less than $30.

The media reports on gas prices are misleading. They are about the modest drop in costs but fail to look at the numbers relative to the period when a gallon was $2. In some parts of the U.S., prices were that low in early 2007.

It is unlikely that falling gas prices will do much to improve consumer economics until the register reads under $3. Until then, the consumer will stay pinched and won't be over at the mall buying new clothes.

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

August is expected to be another troubling month for domestic cars sales. U.S.-based car companies have seen sales off over 20% in some recent months. If August does not show some minor improvement, the rest of the year could be more of a disaster than expected.

General Motors (NYSE: GM) has offered amazingly attractive incentives on its vehicle line including "employee pricing," cash back and low interest rates. With all of those in play, the largest U.S. car company should have a reasonably good month. Or, that is what the market is hoping for.

The Wall Street Journal writes that J.D. Power & Associates expect August sales to be a modest improvement from July. If that does not happen, it will be a catastrophe. It would say that even aggressive pricing cannot bring wary consumers back into the car market; that falling consumer income cannot overcome the allure of even the best deals.

The potential car customer may be so broke that he can't even afford to take a car for free. The gas will cost too much.

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

Citigroup cut Cablevision (NYSE: CVC) to Sell from Buy, according to MarketWatch. The financial sites also reports that Jefferies upgraded China Sunergy (NASDAQ: CSUN) to Buy from Hold.

Citigroup upgrades Ann Taylor (NYSE: ANN) to Hold from Sell, according to Briefing.com. The news service also reports that Merrill Lynch upgraded Bemis (NYSE: BMS) to Neutral from Underperform.

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

Some of the participants at a recent retreat of central bank governors and economists charged that the Fed did too much to help Wall Street and too little to aid taxpayers.

According to the Associated Press, "A possible bailout of Fannie Mae and Freddie Mac, on the heels of similar action involving investment firm Bear Stearns, seems to send a loud signal to financial companies that the government will clean up their messes."

The point may make seen in dollars and cents, but it fails to acknowledge that a complete collapse of the financial systems does no one any good. The Fed and Treasury have put tens of billions of dollars of liquidity into banks and brokerages, mostly in the form of low costs loans. A bail-out of Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) could cost billions more. Ultimately, taxpayers will foot the bill for those actions.

By listening to Wall Street, the Fed has helped the financial industry while ignoring other troubled sectors like automotive. But, if a large U.S. bank or brokerage firm fails, the panic could drive the markets into a flat spin and trillions of dollars in wealth would be lost.

The Fed is too close to the financial community and that is a good thing.

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

Most investors think Sarbanes-Oxley regulations have been the rule of the road in corporate governance since put into law in 2002. That has never quite been true. The law has been challenged in the courts for almost six years, accused of giving the federal government too much power to push public companies around.

What appears to be the final challenge to Sarbanes came to an end as a federal appeals court turned back a legal challenge to the act.

According to The Washington Post, "Businesses have protested that the act imposed costly burdens and provided too little benefit." The cost issue is entirely true, especially for small public companies that have had to stretch financial resources by spending hundreds of thousand of dollars to meet the requirements of the law.

But, it would be hard to make the case that the average shareholder is not better off with more independent corporate audit committees and accounting firms under pressure to perform flawlessly. A look at the number of companies that have had to restate financials because of errors uncovered and enforced by audit committees is a testament to the benefits of the law. The law has ended the habit of giving large institutions a "look" at company prospects and has taken away many of the disadvantages that individual investors have suffered for decades.

Sarbanes has been expensive, but the alternative would have done the common shareholder a great deal of damage.

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