Water Cooler Finance: Lions And Diapers And Dows, Oh My!

By Sean Joyner | November 08, 2010 AAA
Water Cooler Finance: Lions And Diapers And Dows, Oh My!

There was some good news in the employment front last week, as a hiring surge created a mass amount of new jobs - just don't tell that to the stagnant unemployment numbers or the staff at MGM. It is starting to seem as if every time we see a glimmer of light, there is a dark cloud looming. (Catch up on last week's news in Water Cooler Finance: Rising Markets And Buffett's Successor.)

IN PICTURES: 6 Hot Careers With Lots Of Jobs

Ups and Dows
Thanks to the latest efforts by the Federal Reserve to boost the economy, investors drove the Dow to its highest point in over two years. On Wednesday, the Federal Reserve announced its plans to purchase $600 billion in long-term Treasury securities, in order to increase the money supply and (hopefully) lending and liquidity in the United States.

This second implementation of quantitative easing (dubbed "QE2") will be implemented at a pace of $75 billion per month, but investors, pleased with the news, helped rally stocks to numbers we have not seen since before Lehman Brothers Holdings filed for bankruptcy on September 15, 2008. (For more information, see What Is Quantitative Easing?)

If the desired effect of this second cycle of stimulus is realized, it could mean increased monetary flow not only to the banking system, but subsequently the housing market, small businesses and corporations as well. Based on the rally in the market that the news spurred, it is obvious that investors are optimistic.

The Wounded Lion
The roar of Leo, the mighty MGM lion, is not sounding quite as intimidating these days, as 86-year-old movie company Metro-Goldwyn-Mayer filed for bankruptcy protection last week. The company saw a 59% decline in cash flow in recent years, according to the Wall Street Journal. Over $4 billion in debt will be forgiven, as the company prepares for its long-term restructuring. Rogue investor Carl Icahn agreed to support MGM's restructuring plans, and as a result will earn a seat on the company's board. MGM Studios is known for titles in its game-changing film library, including "The Wizard of Oz," "Ben-Hur," "Gone With The Wind" and over 4,000 others. The Rocky franchise (which includes the more recent "Rocky Balboa" sequel) is also in its collection.

As for upcoming projects from the company, MGM says it still plans to release its forthcoming series based on the J.R.R. Tolkien novels, "The Hobbit" (co-produced with New Line Cinema) and will continue releasing movies in the James Bond series in the coming years.

This Job's For You
In an optimistic turn, October saw great growth in the job market. Over 150,000 jobs were created last month, which is a sign of brighter days for the economy. Most of the jobs were added in the services industry, which begs the question of whether they will still be around in January. At any rate, for the 9.6% of the population that are still unemployed, even temporary or seasonal work is welcome.



You read that right - the unemployment rate was still 9.6% in October, the same as it has been for roughly three months. Many people in industries across the board are still out of work, and the seemingly endless search for employment is driving more people out of the hunt. (For a look at where unemployment is falling, see 10 States Where Unemployment Is Falling.)

Amazon Goes to Poop
In its largest acquisition since purchasing online footwear retailer Zappos, Amazon announced its purchase of Quidsi for $500 million in cash. Quidsi is the parent company of Diapers.com and Soap.com - both online distribution and sales sites with a heavy focus on customer service and ease of use, much like Zappos.

Yahoo! News reported that Wal-Mart also made a bid for the company, but was beaten out by Amazon. Co-founders Marc Lore and Vinnie Bharara will remain with the New Jersey-based Quidsi under multi-year contracts with their new bosses.


The Bottom Line
On the heels of the biggest power shift following an election in U.S. politics since the 1940s, it's implied that citizens are not confident in many of the government's efforts to create jobs, increase spending or loosen the purse strings of lenders and banks. But it is still left to be seen whether the last two years will have a lasting impact on building a stronger economy, or if they will simply be seen as a dark footnote - a hiccup in an otherwise maneuverable market.

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