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The Weekly View

Week of February 11, 2013

The Weekly View Week of February 11, 2013 Shaky situation continues in the S&P500; after reaching

Shaky situation continues in the S&P500; after reaching the five year high the previous week. Although it is still hovering around the 1515 mark, the fluctuations are becoming larger and more frequent. NASDAQ is showing high volatility compared to the benchmark market. The market’s inability to stay beyond the 2012 peak of 3197 is fueling the expectation of a bear market. In a new development, the recent high influx of money from small investors is reported to be more focused on the ETFs. This is good news for companies like Vanguard, BlackRock, Charles Schwab and such. But, reluctance of investors to divulge in information gives opening to market skeptics. Apple continues to be in news because of the prospect of high dividend to its shareholders. The whole market tumbled when Wal-Mart reported its disastrous sales situation. That, along with recent slowing of job growth, and GDP shrinkage is not presenting a happy picture in the future; but housing developments finally are at a level to be considered a growth driver.

Entertainment becomes the star

The star of the retail service, Netflix had

increased its shareholder value substantially this week. The price per share opened at $180.66 per share on Monday and closed at $189.51 on Friday. The company announced on Monday its plans to create a new, original television series. They signed a deal with DreamWorks

Animation to create “Turbo: F.A.S.T.” and will

target children and will make it available to all of their customers. The public appears to have favored this decision. This announcement and

their 2012 fourth quarter results of a 7.9 million dollar net income are driving up share prices.

And their new show “House of Cards” got huge

public and critical acclaim. If we look back a few months, we can see Netflix struggling to gain customers and losing their value; but it has showed a great comeback.

Air travel covers the front page

The Industrials sector has performed excellent this week, rising 1.84% over the past five days. Meanwhile, the Dow Jones Transportation Averages continues to close just under 6000.

Much has occurred this past week in regards to

air travel. AMR Corp’s (OTCQB: AAMRQ)

bankrupted American Airlines has merged with US Airways Group (NYSE: LCC) to form American Airlines Group. The two firms will begin the arduous and complex tasking of combining finances and forming the largest airline company in the world. US Airways

Group’s stock closed at $14.50 on Friday, $1.14 below its 52 week high.

Meanwhile, European Aeronautic Defense and Space Co (EURONEXT: EAD) subsidiary Airbus has decided to use nickel-cadmium batteries for its newest A350 jet instead of the lithium-ion batteries that have caused so many problems for Boeing (NYSE:BA) in the past month. The industry as a hole appears to being backing away from lithium-ion batteries amidst persisting questions regarding potential safety hazards.

A stock to buy is mechanical power transmission manufacturer Altra Holdings, Inc (NASFAQ:

AIMC). After announcing stellar 2012 earnings and a quarterly dividend, the stock is trading at a 52-week high of $26.51. Analysts at Robert W. Baird project the stock to reach $32.00.

Tech stars fight and keep market interested

This week was another interesting one for

everyone’s favorite fruity tech company, Apple.

Stock price for the tech giant dropped $20.00

this week, coming to a rest on Friday at $460. There has been much speculation as to what has caused the company’s stock to drop 12% since the start of the year. Some analysts are blaming increasing competition from the likes of Samsung and Microsoft. However, according to a disclosure document filed with the SEC,

billions of dollars’ worth of APPL stock were

dropped by hedge funds between September and

Drexel Finance and Investment Group; Weekly View of February 11, 2013

December 2012. This could also be a major factor in the loss in stock value.

It

was

also announced this week that

Apple

products will

now be

sold

at

Staples stores

across the US. This could be just the thing

Apple needs to boost its sales and stay competitive within the market. Another interesting turn for the company was announced this week. Apple does not have the trademark

for “iPhone” in Brazil.

Instead the trademark

belongs to a small tech company that

manufactures a low cost Smartphone on the

Android

operating

platform.

Apple

has

of

course challenged the trademark claim.

It was announced by Apple competitor Microsoft this week that they will be opening two permanent Microsoft Stores, one in Detroit

and one in Honolulu. They seem to be taking a

page from the competitor’s book, creating their own version of Apple’s own wildly popular

chain of retail stores. This could be great news

for Microsoft’s bottom line, if their stores

become a success.

Microsoft also had a bone to pick with Google this week about their free mail service. Microsoft is becoming an advocate for privacy

on free email services, as a way to promote their own free email service. Part of this advocacy was making consumers aware of the ‘scanning’ process that Gmail uses. Google scans user’s

emails to target them more effectively for advertisements, looking for key words and subjects.

Buffett bet’s far reaching effects

Some important financial stocks went up this week in light of a major announcement from Berkshire Hathaway and 3G Capital. Warren Buffett announced on Thursday that he would be acquiring H.J. Heinz Company for an estimated $23 billion. Because mergers and acquisitions provide the highest margins for capital market businesses, a large paycheck awaits the firms that are selected to work on this particular acquisition.

The top three companies that deal with mergers and acquisitions are J. P. Morgan Chase (NYSE:

JPM), Goldman Sachs (NYSE: GS), and Morgan Stanley (NYSE: MS). All three of these firms have seen their stock prices increase nearly 1 percent each this week. Additionally, other prominent national banks such as Bank of America (NYSE: BAC) and Citigroup, Inc. (NYSE: CIT) have also seen increases in stock prices.

Mergers and acquisitions on a scale as large as this with a name as big as Warren Buffet are certainly healthy for the financial sector. Additionally, mergers and acquisitions demonstrate a tendency toward increased activity in the economy and more trust in the financial institutions on which the economy is built. Consequently, economists, experts, and certainly the aforementioned large banks are

hopeful that Berkshire Hathaway’s acquisition

of H.J. Heniz Co. is the first of many big time mergers or acquisitions that will work to

continue the revitalization of the financial sector.

Heinz deal helps competitors up

There has been a lot of speculation going on within the stock market in the past month, but the consumer staples have been providing a steady growth. As the markets in Europe, Asia and America tilted downwards, and as every other sector started showing signs of tiredness, the consumer staples sector experienced stable gain. While many experts tend to believe that this is just a random fluctuation in the market, some believes otherwise. Just recently Berkshire and Hathaway purchased 20% of Heinz food company. Right after this news broke the consumer staples sector jumped. Other companies like Kraft Foods, General Mills, and

Campbell’s soup rose by about 1% respectively.

Overall there is reason to believe that investing in the consumer staples sector is a safe choice and that it will continue to experience growth in the future.

South Dakota incentivizes green energy

The energy sector was up 6.21 percent this week; showing optimistic profit increases for shareholders in the energy markets. But there is

Drexel Finance and Investment Group; Weekly View of February 11, 2013

reason to be cautious as the South Dakota Senate committee endorsed a measure that would

increased competition for oil companies around the state and nearby areas. Cost cutting measures

provide incentives for the construction of wind power projects in the state. This will most likely

may occur and result in lost jobs, decreased profits, and a surplus of goods for the gas and oil

have a negative impact on gas and oil companies

companies that

conduct business with South

because of the potential decrease in profits.

Dakota. The issue reflects the current sensitivity

Despite the Senate committee’s good intentions

of

the issue worldwide.

to create a better environment, there can be

The week of February 18, 2013

It is almost two months after the Fiscal Cliff deal; spending cut looms again by the end of the month. And to give us a measure of convenience, the congress is about to go into a week recess with days to go before the sequester. And as usual there is no deal in sight. There has to be spending cuts to tackle the debt problem, but the question is how is that going to affect the economic growth. Consumer and Producer prices data this week will give us an idea of the market balance and future economic growth. People are eagerly waiting for the housing starts number to see if the housing growth is enough to pull the economy. The January minutes of FOMC meeting should provide indication to the future of easing and inflation.

Struggling tech companies are reporting this week. The big name in the new, Dell is going to show us why the LBO is so important at this point. HP can give us an insight into the future of traditional computing as we know it.

On the international front, G20 vows against currency war; but that does not mean there is no threat. And so, Japan’s central bank’s moves are still of interest. And the first response should be from the Euro if any. Italian election can also shake the market.

Contributors:

Entertainment becomes the star Jane Beadling

Air travel covers the front page Jeffrey Herr Tech stars fight and keep market interested Jocelynn Ritchey

Buffett bet’s far reaching effects – Vincent Laudicina

Heinz deal helps competitors up Joseph Amato

South Dakota incentivizes green energy George DiNicola

Director: Maureen Gribb

Editor: Tafhimul Huda