Water Cooler Finance: Steady Stocks, Big G's And Madoff News

By Michael Deane | December 06, 2010 AAA
Water Cooler Finance: Steady Stocks, Big G's And Madoff News

As in most weeks, there was conflicting market news and market sentiment this week, with an optimistic view of employment opportunities even though the unemployment numbers were up again. This week's news involved excitement from Google and Groupon, Madoff's name making a return to the headlines, Cyber Monday and skyrocketing stocks. (Take a look at last week's news in Water Cooler Finance: Insiders, Door Busters And Debt Contagion.)

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Markets, Unemployment and Housing
Before getting into the poppier side of finance news, we'll take a look at the market numbers and trends, employment and housing. The stock market ended up this week, but not quite as high as investors were hoping. As of mid-week, the Dow had erased all of November's losses and gained its sixth-largest gain of the year, but by Friday, following a weak job report, the Dow had only gained 2.6% - but we're not complaining. A robust manufacturing report from China sent the Dow higher on Wednesday, but the rally was dampened by the disappointment brought on by growing unemployment numbers - again.

As of mid-week some financial news reporters, like CNN Money, were reporting that the job market was finally back, but this still is not the case. The unemployment numbers were rolled out on Thursday, and it seems that the early week's optimism was not founded in reality. Though the previous week's numbers suggested some hope, the 26,000 rise in initial claims and the 53,000 rise in continuing claims this week showed that we're still waiting on a strong rebound from the employment market. (Learn more about continuing claims in The History Of The Continuing Claims Report.)

However, another tumultuous market, the housing market, seems to be showing actual signs of hope. The National Association of Realtors Index reported that existing home sales rose 10.4% in October. Though the index is still down year-over-year, at least it's providing some positive figures, unlike the employment market.

Consumer Sentiment
In other positive market news, retailers are reporting good things now that holiday shopping is in full swing. Following a successful Black Friday and Cyber Monday, retailers are finding that consumers are returning to spending, rising 6% last month, and it seems that both retailers and economists alike are optimistic about the rest of the holiday shopping season. Consumer sentiment is also on the rise, which seems a bit strange since the employment market is decidedly not. Still, The Wall Street Journal reported that retailers like Abercrombie and Fitch, JCPenney, Macy's and more were all experiencing significant sales gains this holiday season. Maybe that Thanksgiving parade really does work.

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Art House and Group Buying
This week's gigantic-corporate-takeovers-and-sales news yielded a few interesting stories. Disney's went somewhat below the radar, as it sold Miramax to a group of investors - a deal that's been a long time in the making. The smaller studio is responsible for the artsy side of Disney's releases, and has gotten bigger as the years have gone on. Miramax's early releases included "My Left Foot," "Sex, Lies and Videotape" and "Reservoir Dogs." More recently, Miramax released "City of Men," "No Country for Old Men" and "There Will Be Blood." A prolific studio to say the least, and hopefully it will continue on, as the group of investors would like to focus on Miramax's filmmaking.

In a less successful story, talks have now stalled between Google and Groupon. Groupon, for those who don't enjoy impulse buying deeply discounted yoga sessions, is a group-buying phenomenon, which was recently proclaimed by Forbes as one of the fastest growing companies of all time. Though nothing has been official, the Wall Street Journal and other finance news sites have posted stories of Groupon refusing the reported $5.7 billion offer from Google. Groupon is certainly the largest of the group-buying sites that are quite popular right now, and it will be interesting to see what it and its cofounder, Andrew Mason, have on tap to distance itself from the clones and retain its advantage. If you're going to refuse a nearly $6 billion offer from Google, you must have some plan, right?

Madoff's Return
And "he who shall not be named" was in the news again this week, albeit indirectly. Irving Picard, the trustee that's seeking to get back many of the funds that Bernie Madoff stole, filed a lawsuit against JP Morgan Chase this week, charging that the bank was complicit in Madoff's multi-billion dollar scheme. The complaint, which seeks the return of $1 billion, is the latest in a number of cases that Picard is filing, as he must file all cases by December 11 - two years to the day that Madoff was charged. (For related reading, see Crime vs. Time: Madoff Faces Off Against Fellow Fraudsters.)

The Bottom Line
Despite increasing unemployment, this past week was a good one for the markets. Optimistic consumers, a positive housing market and a rising Dow can only lead to good things in the near-term. Groupon will now have to prove why it's worth more than $6 billion and Miramax may have gotten a new lease on artsy commercial film fare. Things are looking up as we head into a strong December.

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