News Analysis for the Investor on February 20, 2012

Iran stops selling oil to France and Britain

In retaliation against recent sanctions against it, Iran stopped exporting oil to France and Britain, according to Reuters.  The sanctions recently enacted by the Europeans would have stopped the imports of Iranian oil in July, but Iran chose to stop selling to France and Britain early.  The sanctions were imposed by Europe, the US and other countries to stop Iran’s development of nuclear weapons.  The two countries indicate that the importation of Iranian oil will not impact them because they already have a 120 day supply  of oil.  Brent crude oil prices were up to $118 per barrel on Friday.  Anticipate gas prices to continue to increase.

Dow closes shy of 13,000

The Dow closed just below 13,000 on Friday at 12,949 up 49 points from the day before.  CNBC reports that European and Asian markets are mostly up on Monday.  Brent Crude oil prices have jumped to over $120 per barrel.

Greeks continue protests on eve of bailout decision

On the eve of make or break talks in Brussels that will give the Greeks 130 billion euro, or $171 billion, to bail out their debt, thousands once again protested in Athens against the austerity measures required by the EU in order to advance the funds. Reuters reports that the current parties in control of Greece have ruled since about 1974, and polls report that few of them will be re-elected in the upcoming April elections.  This makes the other European nations reluctant to forward the funds for they fear the austerity measures will not be implemented.  Some experts indicate that the deal could still fall through and that Europe might be better off letting Greece default rather than forwarding the money without changes being implemented.

China and Japan agree to Support International Monetary Fund and European bailout

In an unusual display of unity, China and Japan have expressed support for an expansion of the IMF resources to help address the European debt crisis, according to the Financial Times.   They warned, however, that the eurozone would need to lift the 500 billion euro cap for its bailout funds it if hoped to persuade non-European nations to increase their funding.  IMF director, Christine Lagarde, has been pushing for an extra 500 billion euro funding to protect economies around the world.  The US said it will not contribute additional funds.

UPS makes bid for European carrier

In order to expand its efforts into Europe, UPS has made a bid for the fourth largest package shipper, TNT Express NV, a Dutch company, according to the Wall Street Journal. TNT said it rejected a $6.4 billion bid made on February 11, but experts indicate that talks are ongoing and fairly advanced.  The stronger US dollar and a profit warning against TNT in the fall made the deal more likely than in the past.  Rumors indicate that Federal Express is also interested in TNT.

Ally Bank forgets to pay interest

Ally Bank says that roughly 5,000 customers, or 2 percent of the banks' CD customers, were not credited with interest in December due to a snafu.  Ally is in the process of crediting the proper interest payments to customer accounts and re-issuing tax statements.  Ally offers a 5 year CD rate with a 1.74 percent yield which is fairly high for this type of product.  The bank holds $18.6 billion in CDs with less than $100,000.  Total deposits grew by 27 percent in 2011.

Gen Y buying more luxury brands

Gen Y, those between the ages of 18 and 29, spent 31 percent more on luxury brands in 2011 than the year before, according to an American Express Business Insights study released last week and reported by USA Today. Gen Y men are more likely to spend a higher proportion of their income on luxury items than women. Gen Y spenders are more strategic, pairing luxury items with cheaper items.  Experts indicate that overall, shoppers are becoming cautiously optimistic.