Out Fox The $treet

Great interview on Bloomberg with the SodaStream (SODA) CEO Daniel Birnbaum. While the interview talks about a ton of growth at SOD, the title is very intriguing suggesting that the company is ok with eroding profits for growth. The CEO was very clear that any profit erosion was very minimal in order to service huge growth. Disclosure: Long SODA. Please review the disclaimer page for more details. 

Wireless providers around the world and especially in the US face a major issue with the massive data consumed by the new high resolution screen of the iPad3. According to the below Bloomberg video, users are blowing through data usage plans in only a couple of days. Wow! The real key is whether AT&T (T) and Verizon (VZ) can charge more for higher usage. More spectrum and capital spending will be needed to keep up with exploding demand, but what the industry really needs is pricing that keeps up with technology. Either develop a way to exponentially expand capacity or charge more for high data usage to slow down demand on the network. As mentioned by Derek Kerton, principal analyst at Kerton Group, users need to be pushed into using Wi-Fi when available such as at a coffee shop or even at home. At this point in the development of the industry, the goal can't really be to limit the wireless use of the iPad, but rather a wiser use of the available tools realizing that wirel...

Most people will probably find these videos normal. In fact, one can probably see similar clips 100x a day. What disturbes me is how the media has become so conditioned to a down market. How the Bloomberg reporter almost appears uncomfortable interviewing a bullish guest. One that uses a proprietary system to trigger when he is bullish or bearish. Not a raging bull that never flips depending on the market conditions. The other video is disturbing because the host and the analysts appear to blow off todays rally as if its all smoke and mirrors. They have a very strange mindset that stock markets never goes up. Not one of fighting history. True the market could slump in 2012 before the inevitable rally. Does anyone doubt that it will eventually be higher whether 2013, 2015, or 2020? An likely much higher considering the current PE ratios and earnings will undoubtedly continue ramping year after year. Don Hays on Bloomberg: FastMoney analyst Louise Cooper: ...

Another amazing story of how America is turning into a third world country. As China builds everything brand new, the US continues to allow our infrastructure from bridges to sewers to just crumble. According to this Bloomberg report , 3,538 bridges were closed in 2010 while 150,000 bridges are structurally deficient. How is it possible to not only allow a bridge to get into this state of disrepair, but also to allow a bridge to become closed? Businesses and consumers depend on them and life is majorly disrupted when one is closed. Of course, that has become the issue and nature of the American sprawl. As communities move farther and farther from metro areas new infrastructure is built while the outdated roads and bridges are left to deterioate. This naturally encourages home buyers to move to where the infrastructure is brand new. What would happen if the old bridges were replaced first? Would buyers or renters prefer to stay closer to downtown in that case? Tulsa could beco...

As the market crashes and especially the global growth stocks, earnings estimates for SP500 stocks continue to climb into record territory. Profits are now forecast to reach $104.73 in the next 12 months, according to data compiled by Bloomberg. Some analysts are even forecasting $112 for 2012. Whats amazing about these data points is that the four-week increase in earnings on May 2nd represented the biggest gain since May 2010. Oddly that was the same period where the market sold off in 2010. The inverse correlation between raising earnings and the market selling off seems backwards, but we've now seen it 2 years in a row. Last year was a buying opportunity and this year could easily follow. If the market were to hit those earnings numbers around $104 and trade at the historical PE multiple around 15, the SP500 would reach over 1,600. Today the market sunk over 1% on Greece debt fears and global growth concerns after weak PMI data out of China and Germany providing a great ent...

As the two year anniversary of this bull market that started in March 2009 has come and gone, it's time to actually review some of the facts surrounding typical bull markets. From listening to numerous media reports yesterday, its common place for analysts and hosts to spew out information without researching the past. From this Bloomberg article , numerous real facts about the market were revealed. It's also revealing that alot of the players that called the bottom remain bullish and alot of the cronies that called for a further correction are still bearish. Sometimes it makes you wonder if any of the so called bears had any real insight other then a broken clock is correct twice a day. It also makes me wonder if we'll say the same about the bulls down the road. Clearly a two year rally without a 20% correction seems impressive and sounds like a very long time. At least thats what you get from the typical media. But is it really all that impressive? According to resear...

Interesting Bloomberg report on increasing competition for Indian banks not only for employees, but also the potential for new licenses to be issued by the government. The main thrust of the article is the potential implementation of 'gardening leave' which bans employees from working for a competitor for 6 months unless they pay a fine, but the more important aspect for the 2 Indian banks trading in the US, ICICI Bank (IBN) and HDFC Bank (HDB), are the new bank licenses to be issued by the Indian central bank. Portfolio holding IBN is the main private bank in India and hence the market appears to follow their moves. They appear to already be facing high turnover with 15% of junior staff leaving last year. Not sure that's high enough to be overly disruptive, but the number could rise if more competition is let into the market. Those new banks will want the experience of the employees at IBN. From a business perspective, they'll likely focus efforts on attacking the 7...

Most people won't be surprised to learn that Mexico is leading the world in drug/gang related deaths over the last few years. Some 28,000 people have been killed since 2006 and 11 majors have been executed just this year. What would surprise everybody including myself is the Mexico stock market has lead the world recovery since its peak in 2007/2008 from the financial crisis. In fact, as of yesterday, Mexico was the only stock market to recover its complete losses and post a new high. This while the US stock market is down some 27% from its all time high at the peak in October 2007. More proof that US investors remain too focused on the domestic market and oblivious to the opportunities around the world. Its also another sign that all assets have a price at which they become attractive. Doesn't matter if tourists might not feel safe in the country anymore, as long as the country is capable of producing more goods. Also with the increase of power in Asia and rise in transport...

Interesting report on Bloomberg today regarding companies using cheap credit to buyback stock. Our Net Payout Yield Portfolio favors companies with a buyback much more then the general market, but we're not sold on companies borrowing to buyback stock. In our opinion all buybacks should be made from operating cash flow. True, stocks are at historically low PE multiples and interest rates are at record lows providing a compelling opportunity for some financial engineering, but companies should never worsen their balance sheet unless they are investing in a new service or capital equipment that will provide higher earnings in the future. Buying back stock only increases earnings per share but not the total earnings. The company is not better off and in fact is worse off with the higher debt loads. Its almost as if companies have learned nothing from governments. Once this cash is spent on buybacks, they'll then have to figure out how to pay back the borrowings and maybe at hig...