Money & Investing - Banks.com

Today’s big breaking financial news is that the Bush Administration, in the person of Treasury Secretary Henry Paulson, has announced several proposals to increase Wall Street regulation. Some of the proposals made include the following:

• Private equity firms and hedge funds will now be subject to oversight from the feds. Worth noting: This type of Wall Street regulation will be minimal. The feds will be unable to go much further than collecting information on bookkeeping and other practices until after a financial crisis has taken place.
• SEC will be merged with the Commodity Futures Trading Commission. This move will lead to streamlining and consolidation. Other watchdog groups are also being consolidated in a similar manner. The proposal also suggests that the SEC should lighten up on some regulations.

At a second glance, it looks as though this Wall Street regulation has very little to do with more regulation. The New York Times reports on some points conspicuously missing from the Bush Administration proposal:

But the proposal will do almost nothing to regulate the alphabet soup of sophisticated financial products that have fueled the current financial crisis. And it will not rein in practices that have been linked to the mortgage crisis, like packaging risky loans into securities carrying the highest ratings.

In the end, investment banks and other Wall Street firms will not be faced with onerous oversight from any of these proposals. Business as usual is likely to continue if these Wall Street regulation proposals are enacted (most of them need approval from Congress). The main difference is that the government can look into practices to see whether they contribute to whatever financial crisis is eminent.

What do you think of the Bush Administration Wall Street regulation proposals?

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. 

Tags: investing news blog, Wall Street regulation, Bush Administration, investment banks,
Henry Paulson, private equity firms, Bush Administration financial crisis

With an economic slowdown in place (some economists are going whole-hog and calling it a recession), and with consumer confidence lagging, retail stocks are struggling on the market. MarketWatch reports on the recent consumer confidence numbers:

Earlier this week, the Conference Board reported consumer confidence was at its lowest level since the Iraq War began in 2003, while the Case-Shiller home price index showed U.S. housing prices in 20 major cities declined for the 18th month in a row.

Retail stocks are having issues because they didn’t have a good winter season, and the recent gas prices have been cutting into family budgets. Not only that, but gas prices also affect food prices (transportation costs have to be figured in) — and that means grocery shopping costs more, too. And don’t forget all the re-setting mortgage payments that have many scrambling to give their budgets an overhaul.

All of this means that many Americans just don’t have the money to frequent retail stores like J.C. Penney (JCP), Nordstrom (JWN), Macy’s (M) and Saks (SKS). In fact, all of these share prices are falling this morning on the stock market, although today JCP is getting the worst of it due to its first-quarter forecast.

As for investing in retail stocks, it may not be a bad time to go bargain hunting. I’m not sure how much the expected tax rebates will help (I have a feeling a lot of it will go toward staying afloat), but in the long run these stocks tend to recover — as long as the company doesn’t completely fold.

Look for retail stocks that are strong in fundamentals, and that are likely to make a comeback when the economy improves and Americans are spending money on non-essentials again.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional.

Tags: stock market news, stock market, stock market blog, retail stocks,
strong fundamentals, JC Penney JCP, consumer confidence

In an effort to bolster its technology credentials and to enter the luxury car market, Tata (TTM) has arranged to buy the Jaguar and Land Rover brands from Ford (F). The announcement was made yesterday, and today TTM struggles on the stock market as Ford stock makes slight gains.

TTM did get some pretty sweet things out of the deal. A Ford press release explains the terms of the deal:

As part of the transaction, Ford will continue to supply Jaguar Land Rover for differing periods with powertrains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies. Ford also has committed to provide engineering support, including research and development, plus information technology, accounting and other services.

In addition, Ford Motor Credit Company will provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which can vary by market, of up to 12 months.

But can Tata cut it? Tata is famous for its release of a $2,500 car in India, and mostly it is known for its mediocre quality. Which is why Ford has to provide so much support in terms of technology and parts. It’s declining share price may be a sign that investors don’t believe Tata can pass muster. On top of that, the global economic slowdown means that the market for luxury vehicles is likely to shrink. Can Tata keep up when it is putting money into a market that continues to decline?

On the Ford end, it is probably a helpful sale. Not only does Ford get a cushion, but it also gets rid of two brands that have been bleeding out capital for years. Ford is now working on consolidating its North America operations. This is a good move, since its foreign ventures have generally fallen flat.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional.Tags: TTM, Ford (F), Tata Ford deal, stock market news,
stock market analysis, Jaguar Land Rover