American Airlines, British Air and Spain's Iberia have signed a joint business agreement on flights between North America and Europe, American Airlines announced Thursday.
American (NYSE: AMR) added that the three airlines plan to file for global antitrust immunity from U.S. officials and will also apply from the same in Europe.
Under the deal announced Thursday, the three airlines will cooperate commercially on flights between the United States zone (encompassing Canada and Mexico) and the European Union (including Switzerland and Norway), while continuing to operate as separate, legal companies.
Analyst: 'an absolute, positive, must deal'
Stock Analyst C. Leonard Bauer told BloggingStocks Thursday rival competitors may argue that the deal will reduce competition internationally, but in Bauer's interpretation the agreement is "an absolute, positive, must deal," due to the changing nature of flight and air travel.
"The reality is, we're becoming a global travel marketplace, not just a national one, one that will eventually be accessible to everyone, and in this decade the key players will compete on transcontinental and global routes," Bauer said. "That means the carriers need global scale and the American-British Air-Iberia deal accomplishes that. It is an absolute, positive, must deal." (Bauer added that he does not have a rating on nor own shares in any airline. However, Bauer does have frequent flier miles/points in American Airlines.)
Food manufacturers promised Mexico's government on Wednesday they would freeze prices on more than 150 food products to help families cope with the rising cost of food, The Associated Press reported Thursday.
Mexico President Felipe Calderon said prices for goods including beans, canned tuna, fruit juices, coffee, ketchup and canned tomatoes will remain fixed until December 31, 2008, The AP reported. Calderon blamed rising food prices on surging global energy prices, food demand in China, and the use of corn for ethanol production.
Good intention, wrong method
Economist Glen Langan said he agreed with the need for food assistance for Mexico's poor, but disagreed with the mechanism.
"A more effective program would be a larger cash payment or food subsidy to citizens," Langan said. "The pricing mechanism should be kept in place, because it has many benefits. Cash payments or subsidies to poor residents are much more targeted and don't provide a benefit to those who don't need it. [Mexico President] Calderon did announce a monthly subsidy, 120 pesos [$11.60], but it isn't large enough."
The current head of OPEC, Algerian Energy Minister Chakib Khelil, seems to say the same thing once a month. The repetition does not make it more convincing, but he went back to it again this weekend.
According to the AP, his view of oil is that "the high prices do not reflect market conditions but rather other factors linked to the weakening dollar, market speculation, and the U.S. subprime mortgage market turmoil."
Recent studies indicate that there is much more at play than the dollar and traders trying to make a buck. Oil exports are falling in many countries. Last month, Indonesia said it would drop out of OPEC. It is not longer a net exporter of crude. Mexico says that some of its largest fields are aging and that their yields are down, perhaps permanently.
Even in Saudi Arabia the need for petroleum to build infrastructure and fuel cars is rising, keeping more oil inside the country.
As far as anyone can tell China, India, and the emerging markets draw as much crude now as they did when oil was below $70. Governments in many of those states are still willing to underwrite the cost of oil to help drive GDP with cheap gas and diesel.
Saying that supply and demand are not at work is a convenient way to mask greed, but it does not work.
Douglas A. McIntyre is an editor at 247wallst.com.
The move came about a week after the company announced that it wouldn't be able to meet its goal of returning to profitability next year due to the current economic slowdown. A factor leading to the company's problem has been a shift in consumer preference from trucks to smaller, more fuel efficient vehicles, a move that comes in reaction to the current record high gasoline prices that have spread across America. Ford said last week it was forced to cut SUV production.
Ford has not released any specific details on the job cuts, but the details are expected to be released sometime in July. The company currently has 24,300 salaried workers in the United States, Canada and Mexico.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
American motorists, already stung by an 80% increase in gasoline prices in the past year, sense that $5 per gallon is ahead, and they may be (regrettably) right.
The national average currently is $3.62 per gallon as tracked by the Lundberg Survey, Bloomberg News reported. Many higher-cost areas of the United States -- including New York, San Francisco, Los Angeles, and Boston -- are already experiencing prices over $4 per gallon.
Further, traders and analysts say seasonal, structural, and geopolitical factors are likely to push gasoline considerably higher in the weeks ahead -- with gasoline's upward arc lasting months, if the price of oil continues to rise.
Primary culprit: Rising oil prices
The biggest factor in gasoline's rise is the price of oil, which Tuesday topped $122 per barrel in NYMEX trading for the first time in its history. Oil is up more than 100% since 2006. In November 2001, oil traded at about $17 per barrel. Moreover, because the crude component accounts for more than 60% of the price of a gallon of gasoline, refiners have passed that added cost onto consumers.
Oil prices have once again hit new highs today, trading up all the way to $118.05, before cooling off slightly, and are currently sitting at $117.85.
The main concern fueling today's move is over supplies from some of the world's major oil producing countries. Nigeria is on the list, as a joint venture of Royal Dutch Shell PLC (NYSE: RDS) stated that it would be reducing its output in April and May by around 169,000 barrels a day. This comes in response to a militant attack on one its pipelines last week.
This is really nothing new to Nigeria, which over the past two years has been the victim of multiple attacks on its oil infrastructure. The country is a major supplier to the the United States, and over the past 2 years the country has seen its oil output fall by a pretty hefty 25%. All the result of militant attacks.
Analysts surveyed by Bloomberg News had expected crude oil inventories to increase by 1.18 million barrels in the past week. Oil inventories declined 2.36 million barrels to 313.7 million last week, the EIA announced.
Oil pops above $114
The unexpected inventory decline sent oil up $1.16 cents to $114.95 per barrel in Wednesday morning trading. The inventory draw also pushed wholesale unleaded gasoline up 5 cents to $2.91 per gallon. Heating oil also surged 3 cents to $3.29 per gallon. Natural gas rose 2 cents to $10.22 per million BTUs.
Fueling today's rally were concerns over global supply, as news spread that Russian oil production has fallen this year. This is the first time in a decade that Russia is seeing a decline in its production.
Russia is not the only country making headlines. We were also given the news that China had a massive jump in its diesel oil imports last month of a remarkable 49%. So, we are being given both the news that Russia is producing less, while China is demanding more; the perfect recipe for a strong day for oil prices. Other oil producers, Mexico and Nigeria, announced that they had temporarily shut down some of their production as well.
Western Union used to transmit telegrams like: Dear George, my office authorized a transfer of up to fifty thousand dollars to the Bailey Building & Loan STOP Then the advent of the telephone substantially reduced telegram traffic STOP
Next came the Internet and e-mail, which not only reduced telegram traffic to a crawl, it also decreased hard-copy letter writing, as the U.S. Postal Service will confirm.
Since that time The Western Union Company (NYSE: WU) has focused on its consumer money transfer service, or moneygrams, and the results have been impressive. Analysts expect 11-14% revenue growth in FY 2008 on higher transaction fees and foreign exchange fees.
In an attempt to explain his position regarding trade, Democratic presidential front-runner Barack Obama said that he did not oppose free trade, despite making increasingly critical comments about multilateral deals such as NAFTA.
Asked how other countries should interpret his position, Obama responded that he supported free trade but wanted it to be fair.
"What the world should interpret is my consistent position, which is I believe in trade," he said after meeting with workers at a manufacturing plant in Ohio.
"I just want to make sure that the rules of the road apply to everybody and they are fair and that they reflect the interests of workers and not just corporate profits."
Well why, Senator Obama, do companies want to engage in trade? The answer is because both sides feel that they can gain from the deal. Corporations engage in trade to profit. Period. Entrepreneurs start companies because they think they can make a buck. On the other side, poorer countries want to trade to help create wealth.
The new site combines free e-mail, instant messaging and localized content in Spanish. AOL has partnered with Alestra to provide distribution and Grupo Editorial Expansión for content. This also noted that AOL will leverage its distribution with Hewlett-Packard (NYSE: HPQ) to deliver a co-branded local language portal and search solution for Mexico, although the enhanced search looks to still be powered by Google (NASDAQ: GOOG).
The CIA World Factbook counts Mexico's population at 108.7 million as of a July 2007 estimate. It also estimated some 18.6 million Internet users in Mexico. The population throughout Latin America lends to only higher and higher populations throughout the region.
This isn't the first foray in Mexico for AOL, and this probably won't be the end of its Latin American efforts. This may be more of a ground-laying effort for the future, but if the new launch is successful then you can imagine this will be more and more of a gateway to enhance its current efforts throughout Latin America.
"It's a time of hope," claims Ana Laura Pulido, a real estate broker in Mexico. While its northern neighbor remains in the depths of a housing meltdown, the Mexican real estate market has been booming.
Mexico has long found its economy overly sensitive to the happenings in the United States, so to see the country's real estate market thriving despite the turmoil in America is a very encouraging sign for our southern neighbor.
And don't think that American investors haven't started to notice this new trend.
According to Clark McKinley, the spokesman for the nation's largest pension fund, the California Public Employees Retirement System, his fund sees greater returns for its money in Mexico and has already decided to pump over $300 million into Mexican real estate funds.
In today's market, the retail space is fraught with risk. High energy prices have crimped consumers' disposable income, and the housing slump has dented household formation -- a backbone of retail sales growth. Meanwhile, sluggish job growth is sending a signal that a U.S. economic slowdown is underway.
Hence, if one is to consider a retail play, it should be a well-capitalized company, with a demonstrated business model, and Costco (NASDAQ: COST) fits that bill.
Costco helped define the 'get it for wholesale' space and now operates 520 warehouses, primarily in the United States and Canada. (The company operates 30 stores in Mexico via a joint venture.)
Costco's philosophy differs from its competitors in that it focuses on a limited selection of national-brand merchandise and some private-label products. That laser focus, combined with buying direct from manufacturers and the company's bare-bones warehouses, enables the company to operate profitably despite smaller gross margins. The Reuters F2008/F2009 EPS consensus estimates for COST are are $2.98/$3.39.
Sudden large, negative financial events can disrupt, or at least critique, even the most bedrock economic tenets, let alone recently-percolated conventional wisdom.
On the heels of the housing and credit market crunches, one conventional wisdom item that's currently coming under criticism is the notion of "decoupling" [Subscription required] - the theory that despite a slowing U.S. economy, the European and Asian engines of growth would be sufficient to maintain adequate global GDP growth, The Wall Street Journal reported.
The International Monetary Fund published a chapter in April 2007 entitled "Decoupling the Train," which argued that the U.S.'s mild GDP growth was caused by a housing sector correction. Housing was less global than other commodities, it argued, and hence would not impact the world economy as much.
For example, about two months ago, the IMF projected that global economic growth would slow just slightly in 2008 to 4.8% from 5.2% this year.
Wal-Mart Stores, Inc. (NYSE: WMT) has a winner in its Wal-Mart de Mexico operations, as sales growth in that country has outshined that of U.S. operations for quite a while now. Indeed, the world's largest retailer said that it expects the banking unit of Wal-Mart de Mexico to become profitable by the fourth year of operations.
Wal-Mart de Mexico, or Walmex as it is affectionately known, launched its Banco Wal-Mart during November with one location in Mexico City and three other locations in Toluca. Since Wal-Mart did not have much luck opening a retail banking operation in the U.S., perhaps it has closed down efforts domestically to concentrate on foreign banking operations? That would certainly be an obvious interpretation here.
Wal-Mart's combination of retail commerce and consumer banking could be seen by some as a pair that just does not belong together. From one angle, it gives too much power to a single entity over consumer spending and saving. But then again, the environments and government regulations change per country, so why shouldn't Wal-Mart have retail banking operations in Mexico? Is Wal-Mart trying to shore up revenues from the non-retail side of things outside the U.S.? Of course, and with Walmex's banking hours of evenings and weekends, it may just have the moxie to do well there.
Food manufacturers promised Mexico's government on Wednesday they would freeze prices on more than 150 food products to help families cope with the rising cost of food, 
Some more bad news for American car maker 
American motorists, already stung by an 80% increase in gasoline prices in the past year, sense that $5 per gallon is ahead, and they may be (regrettably) right. 
Oil prices have once again hit new highs today, 
In an attempt to explain his position regarding trade, Democratic presidential front-runner Barack Obama 
In today's market, the retail space is fraught with risk. High energy prices have crimped consumers' disposable income, and the housing slump has dented household formation -- a backbone of retail sales growth. Meanwhile, sluggish job growth is sending a signal that a U.S. economic slowdown is underway. 
Sudden large, negative financial events can disrupt, or at least critique, even the most bedrock economic tenets, let alone recently-percolated conventional wisdom.
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