Thomson Reuters Ambiguous Code

Thomson Reuters

Thomson Reuters (TRI) allows one of their leading journalists to resign. According to an article by Lilly Vitorovich of the Wall Street Journal columnist Neil Collins, a well-known financial journalist, has resigned after he allegedly breached the media and data information group’s code of conduct on share dealing.

In reading Lilly Vitorovich’s article she had a quote from  David Schlesinger, editor-in-chief of Reuters.

“While we have no evidence the journalist was abusing his position for financial gain, we take such breaches extremely seriously and that journalist resigned with immediate effect during our investigation,” Mr. Schlesinger said.

It appears that Neil had positions in  BP PLC, Rio Tinto PLC and Marks & Spencer Group PLC in which he had a financial interest and made trades shortly after writing. But Mr Schlesinger says there is no evidence of an abuse leading to financial gain. Hmm gets confusing Mr Schlesinger.

According to WSJ, The Thomson Reuters code of conduct says journalists shouldn’t write about shares they own unless they notify their interest to their manager. Journalists also shouldn’t trade in shares they’ve recently written about or intend to write about in the near future.

The problem with the code of conduct is the time ambiguity. The more certainty and transparency the better. Thomson Reuters needs to set time specific limits. Cut and dry. High mindedness may not be defendable in this case.

Disclosure: George Gutowski writes from a caveat emptor perspective. I have no position in stocks mentioned in this post. I do not have a relationship with Neil Collins. I do have a subscription to WSJ online. I do not use any subscription services from Thomson Reuters.

European Retirement Riots

France just had a terrible weekend. The French worker wants to retire at 60. The German worker needs to work until 67. Here is the solution. Abandon the mandatory retirement age. It discriminates against the older worker. Allow people to retire when they want. Retirement plans are time driven. The longer the money stays in the larger the retirement. The sooner you leave the lower the payment.

Retirement should be a choice.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post

Citigroup Credit Defaults Tax Rate Driven!


Image via Wikipedia

Citigroup (C) reported better results because it is not losing as much money to credit defaults. Can you believe that? The mortgage market is a mess. Documentation errors abound. The consumer is still in big trouble. Unemployment is high. But Citigroup says they are not losing as much money because defaults are down.

Take a look at the geographical spread of defaults. The write-offs continue in non US jurisdictions. The earnings release points to lower taxes in more tax efficient jurisdiction. So if you slice dice and securitize product and move it to high tax jurisdictions to take the write-offs Hmm Maybe even hid them as losses in securities trading and not outright credit losses Hmm

The devil is in the details. In the very fine print that is hard to follow.

Disclosure: George Gutowski writes from a caveat emptor perspective: I hold no positions in stocks mentioned in this post.

Scottrade Secret Danger Messages

Scottrade Center

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Scottrade a leading on-line brokerage with many awards for customer service and a kick ass Chinese on-line trading platform needs to look at its TV Commercial strategy. The subliminal messages are manic-depressive. Scottrade was founded by Rodger O. Riney who is also President, Chief Executive Officer and many believe the owner.

They are currently running an ad of an attractive young couple moving into a new house. They take great comfort from the cable guy who lets them know their cable and internet connection is up and running including financial information channels. Connect the dots as to how the house was earned.

But then you see the moving crew checking out their stocks because it is Triple Witch Friday and they need to know what’s happening to their positions. By the time moving men are fully engaged in Triple Witch Trading you know the market has reached a frothy speculative pitch.

Scottrade’s new Chief Marketing Officer Kim Wells recently commented on the new ad campaign. “Through this campaign, investors and traders will see that although do-it-yourself investors are, by definition, investing independently, at Scottrade they are never truly alone.”  

The Welcome To Scottrade television spots were created by Boston-based advertising firm Gearon Hoffman, which has created and produced a number of television campaigns for Scottrade, and directed by Barry Levinson, who has also directed the films Bugsy, The Natural and Rain Man.

Thank you to Scottrade for the warnings.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.

Google — Unhedged Energy Play?

Image representing Google as depicted in Crunc...

Image via CrunchBase

Google (GOOG) has been criticized for making a lot of deals and acquisitions without any apparent benefit. Cars without drivers just adds a wacky factor to all of it. But you have to become concerned about investors who do not understand Google’s energy read wind power play.

Google uses huge amounts of electricity. They are similar to airlines who live and die on aviation fuel pricing. By investing in wind power they are trying to control and hedge their costs. Airlines merely crash and burn when oil gets too high.

This begs the question. when will Google provide detailed break outs for their energy costs on all those server farms? Will they ever be able to make peace with the Chinese and have access to economically priced local electricity?

Will Google become an unhedged energy play? 

Disclosure: George Gutowski writes from a caveat emptor perspective. He has no position in stocks mentioned in this post.

Safeway Disinflation Magic Trick

Safeway Medallion logo, 1980

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Safeway (SWY) announced Q3 results telling investors revenues are down because the per item sales price is off. That is called disinflation. The EPS was managed upward by reducing the float. This can only go on for so long (usually not long) before investors become disillusioned with the disappearing act.

Top line growth has no substitute. Financial engineering magic tricks are short-term desperate tactics. Safeway is spending four times as much on share buy backs as they are on dividends. Not a sustainable strategy. But listen to what the boss had to say.

“Our third quarter results were in line with our expectations,” said Steve Burd, Chairman, President and CEO”

Disclosure: George Gutowski writes from a caveat emptor perspective. He holds no positions in stocks mentioned in this post.

JPMorgan Graveyard Whistle

The current JPMorgan logo used for company's I...

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JPMorgan (JPM) does not understand macro trumps micro. In the latest earnings release they claim the rate of credit losses and write-offs is improving and therefore they are making more money. We have wholesale moratorium on foreclosure proceedings within the industry. We have stubbornly high unemployment. We have huge over hangs in residential real estate.

JPMorgan admits that their own good customers are still de-leveraging and reducing indebtedness. They also admit to shrinking margins. However Chief Executive James Dimon and Chief Financial Officer Douglas Braunstein said the quarter was a “solid” one.

JPMorgan is using cheap accounting tricks to boost short-term profits. Macro events will overwhelm short-term desperation.

Disclosure: I write from a caveat emptor perspective. I have no positions in stocks mentioned in this post.