Five Things You Need to Know for Friday
What you need to know (and what it means).
Five things you need to know to stay ahead of the pack on Wall Street.
1. White Lightning/White Heat
Silver this morning is spiking to its highest level in more than 22 years. Yesterday silver crossed the $10 high for the first time since 1984.
- Barclays Global Investors may soon get U.S. approval for an exchange-traded fund linked to the price of silver.
- The SEC says there is no timetable for when a decision may occur.
- Apart from being used as an ETF, silver is used mainly in jewelry, tableware, photography and electronics.
- Silver (chemical element symbol Ag) has the highest electrical and thermal conductivity of any metal, even copper.
- It occurs in minerals and in free form.
- Silver has been coined to produce money since 700 BC.
- The words for "silver" and "money" are the same in at least 14 languages.
- Silver futures have gained 37 percent in the past year, outpacing the 31 percent gain in gold.
2. Digital Underground
The US Department of Justice is investigating allegations of price fixing by top music labels on their charges for digital downloading.
- A Justice Department spokeswoman, Gina Talamona, said that antitrust enforcers are "looking into the possibility of anticompetitive practices in the music-download industry."
- The companies involved are Vivendi Universal's (V) Universal Music Group; Sony BMG, a joint venture of Sony Corp. (SNE) and Bertelsmann AG; EMI Group PLC; and Warner Music Group Corp. (WMG).
- The inquiry mirrors an ongoing probe by New York attorney general Eliot Spitzer into what the industry charges firms such as Apple (AAPL) to sell music online.
- Labels have been at odds with Apple over what it charges for tracks sold through its iTunes online service.
- Music companies have been late to realize that they need to come to terms with digital music sales as CD sales dwindle.
3. The I, to the S, to the ISM
Today at 10 a.m. EST the Institute for Supply Management releases its non-manufacturing index. We know people (who?) watch this data, but why? What is it?
- Founded in 1915, the Institute for Supply Management is the largest supply management association in the world.
- Their mission is to promote and lead the supply management profession.
- Every organization - whether manufacturing or service, large or small - employs at least one person who is involved in supply management activities.
- The ISM manufacturing index dates to the 1940s.
- It was changed in 1998 to adjust for seasonal variation.
- The ISM's non-manufacturing index is composed mostly of service-related businesses, which make up the majority of overall U.S. economic activity.
- Readings above 50 percent in the ISM non-manufacturing business activity index indicate an expanding economy.
- Expectations on the Street today are for a reading of 58, versus 56.8 prior.
4. Corporate Debt, Backed by the Full Faith and Credit of the U.S. Speculator
The Wall Street Journal's Heard on the Street column this morning takes a look at talk of a "corporate debt bubble."
- First, what is corporate debt? Corporate bonds are debt securities issued by private and public corporations.
- Companies issue corporate bonds to raise money for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business.
- By buying a corporate bond, you are lending money to the company that issues the bond. In exchange, the company promises to return your money (the principal) at a specific date down the road, while paying you a stated rate of interest to compensate you for letting them use your money.
- According to the WSJ, long-term interest rates remain low and credit defaults among corporate borrowers are rare these days.
- Even low-quality corporate bonds are trading like they are almost risk-free with very low yields.
- Private-equity firms, which invest in businesses with the hope of ultimately selling them or taking them public at a healthy profit, are increasingly active, piling up debt, or leverage, on their portfolio companies, the WSJ says.
- The major concern is that things are fine... until they aren't. The increased use of leverage further complicates the matter as current market conditions are making it unusually easy for even weak companies to borrow more and more money at historically low rates.
T.G.I.F. is an acronym for "Thank God (or Goodness) It's Friday." Some believe the phrase originated in the 1930s at the University of Missouri when student George Hilton walked into a deli near the school sat down, ordered a beer and said, "Thank God it's Friday."
- The phrase was co-opted in 1965 by Alan Stillman with the opening of T.G.I. Friday's restauarant/bar here in New York City.
- T.G.I. Friday's was one of the first "singles bars."
- See also: Thank God it's Friday starring Donna Summer, 1978.
- See also: T.G.I.F., Thank God it's Florida.
- Try not to use the phrase "Happy Friday!" as a greeting.
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