Author: ToddSullivan

This is just hours before he later denied making the famous “keep our money in Bear Stern (BSC)” comment, that he now says was not an endorsement of the stock.

In this video, he clearly pushed the STOCK.. At least TheStreet.com has not taken this one down yet…

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Archer Daniels Midland (ADM) has filed a price-fixing lawsuit against the 5 major railroads. This could snowball….

The lawsuit filed Tuesday in federal court in Minneapolis names Union Pacific (UNP), BNSF (BNI), CSX (CSX), Norfolk Southern (NSC), and Kansas City Southern (KSU) as the conspirators. It accuses the five railroads of setting fuel surcharges by working through the Association of American Railroads, which publishes the indices used by railroads to calculate rates. AAR’s board includes the CEOs from the five railroads, according to the lawsuit.

ADM accuses UP and BNSF of agreeing to tie their surcharges to the same fuel price index, and to impose changes in the surcharge on the same day. While UP and BNSF locked their surcharges together in the territory they dominate, the Western U.S., ADM claims CSX, Norfolk Southern and Kansas City Southern did the same thing in the East.

The effect is that the railroads’ fuel surcharges moved in unison, the lawsuit alleges.

Most railroads hedge their fuel purchases. This ought to means that actual fuel spending should vary from one railroad to the next. If that is true, the fuel surcharges should have also varied, but they did not. In January 2007 the Federal Surface Transportation Board said railroads must link surcharges to their actual fuel costs.

ADM claims uniform pricing “could not have happened by chance or coincidence.”

The railroads of course denied the charges saying they “have no merit” and that they would “vigorously defend them”.

ADM says it alone has paid more than $250 million in fuel surcharges since 2003.

Here is where this could get sticky for the railroads. While ADM is a major rail shipper, there are thousands of smaller shippers looking for ways to reduce or recoup transportation costs. If there is any light at the end of this tunnel as the litigation moves forward, expect a flood of lawsuits to follow. The suits may follow anyway to force a settlement.

What we will then end up with is a major class action suit against the railroads. In that instance the sums the railroads will be looking at will be in the billions of dollars (both in refunds and punitive damages). Considering the 5 railroads only made almost $7 billion between them last year, the outcome could seriously damage the industry.

Disclosure (“none” means no position):Long ADM, None

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When it is no longer just us bloggers but the MSM calling you out, the end of the run is near…

Micheal Lewis writes on Bloomberg.

“Three days earlier, on theStreet.com, Jim Cramer listed Bear Stearns common stock as a “buy” at $62. On his CNBC program that day, he showed his viewers a chart of Bear Stearns stock price and hollered, “Bear Stearns is fine! Do not take your money out of Bear.” Over that weekend — days when the markets were closed and there was no material news about the company — Bear Stearns was believed to be worth $2 a share, so long as the Federal Reserve assumed the downside risk of almost $30 billion of its mortgage securities…

TheStreet.com quickly removed Cramer’s March 11 “buy” recommendation from its page devoted to Bear Stearns. (The Cramer-obsessed Don Harrold’s YouTube account of all this is priceless.) And Cramer went back on CNBC to explain that he never intended for anyone to go and actually BUY shares in Bear Stearns — only that, if they happen to bank with Bear Stearns, they shouldn’t worry about losing their money (a public service to all those “Mad Money” viewers who use Bear Stearns as a bank.)”

This is a tough one for Cramer if for no other reason the actions of Thestreet.com altering its website.

If he had just been honest (he may not be able to), this would have blown over already.

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When did the definition of a recession change from “two consecutive quarters of negative GDP growth” to “not as much growth as we want”?

Everyday day I sit here and read and hear folks pontificate about the US “currently being in recession”. Yet, when one looks at the numbers, not only we not “currently in a recession”, we are not even approaching one.

It has been almost two decades since the last true recession in the US. I know we experienced slowdowns in the mid 1990’s and early 2001-2002 but if we are being honest, those were just simply bumps in the road. In Q4 1990, GDP fell 3% and Q1 1991 followed with a 2% drop from there. We have not had consecutive negative quarterly growth since then. In short, we are spoiled. Prior to the 1990-1991 recession, people had only go back 9 years in their memories to remember the last one. We are currently approaching year 19 which means there are a whole class of investors who have never actually experienced a recession in their investing lives…

So, where are we now?

Gross domestic product rose at an unrevised 0.6% annual rate October through December, the Commerce Department reported today, in line with expectations. For the current quarter ending Monday, economists expect growth to be flat. For Q2, economists expect GDP to fall 1%.

For all of 2007, the US economy grew at the weakest pace in five years, rising at an inflation-adjusted 2.2% rate compared to 2.9% in 2006.

The Labor Department reported that initial claims for jobless benefits fell 9,000 last week but remained at elevated levels. Also, the previous week’s level was revised down by 3,000. The unemployment rate remains at historically low levels.

Inflation, (consumer prices) was revised down to a 3.9% annual rate in the quarter from 4.1% previously reported. Core prices, which exclude food and energy costs, rose at a 2.5% pace, again revised down from 2.7%

None of those numbers, NONE, are recessionary.

Expectations of both business and economists are for the “economy to turn around” in the second half of 2008. So, if this is true, and we have flat growth in the current quarter, we are now running out of time to have a recession.

In fact, the “recession we are in but not entered into yet according to actual data” will most likely never materialize. Confusing?

Remember back in the late 1990’s when people began redefining earnings and were using EBITDA instead the actual EPS? It was as if they wanted us to believe taxes and interest on debt no longer mattered. When people start to redefine metrics, they are doing so to make the current situation fit the outlook they want us to see.

This means when you read or hear people lamenting the recession we are in “due to housing”, you would do best to ignore them. Housing is a significant part but not the total of the economy. They are trying to redefine what a recession actually is.

We are facing “slowing growth” not “negative”. Until we get a single quarter of negative GDP growth, ANY talk of recession is just that, talk.

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In an SEC filing yesterday Carl Icahn and affiliates disclosed they added over 2.3 million shares of Motorola (MOT) on 3/6 and 3/7 at $9.75 and $9.99 a share.

This brings to total ownership to 6.44%.

Disclosure (“none” means no position):None

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Upgrades
Motorola (MOT)- AmTech Research Sell » Neutral
Telecom Italia (TI)- Bear Stearns Underperform » Peer Perform
EnCana (ECA)- Bernstein Underperform » Mkt Perform
Apache (APA)- Bernstein Mkt Perform » Outperform
XTO Energy (XTO)- Bernstein Mkt Perform » Outperform
Waters (WAT)- JP Morgan Neutral » Overweight
Clear Channel Outdoor (CCO)- Jefferies & Co Hold » Buy
Watson Wyatt (WW)- UBS Neutral » Buy
Talisman Energy (TLM)- Citigroup Hold » Buy
Comp. Cervecerias (CU)- Citigroup Sell » Hold

Downgrades
SiRF Technology (SIRF)- Collins Stewart Buy » Hold
Jabil Circuit (JBL)- Longbow Buy » Neutral
Clear Channel (CCU)- SMH Capital Buy » Sell
Jabil Circuit (JBL)- Credit Suisse Outperform » Neutral
Elan (ELN)- Canaccord Adams Hold » Sell
Brookfield Asset Mngmt (BAM)- BMO Capital Markets Outperform » Market Perform
Cooper Tire (CTB)- KeyBanc Capital Mkts Aggressive Buy » Hold
PF Chang’s (PFCB)- Friedman Billings Mkt Perform » Underperform
Hudson City Banc (HCBK)- Friedman Billings Outperform » Mkt Perform
Astoria Fincl (AF)- Friedman Billings Mkt Perform » Underperform
Aircastle (AYR)- JP Morgan Overweight » Neutral
Genesis Lease (GLS)- JP Morgan Overweight » Neutral
Jabil Circuit (JBL)- JP Morgan Overweight » Underweight

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HiPhone, iPod, iPhone, Gphone

– The reason Apple (AAPL) has no deal in China

– The reason iPod sales are slowing

– More evidence Apple’s total control issues may be hurting it

– And finally, this..

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Who can forget Ralph Witworth’s ill timed foray into Home Depot (HD) and the carnage that ensued for shareholders. At least Sprint (S) seems to have learned from that history and gave his demands their due course, the garbage can.

In February I begged Sprint’s new CEO Dan Hesse to ignore Withworth’s call to abandon the WiMax effort and spin off the long distance unit.

New out today from the Journal says Comcast (CMCSA) and Time Warner Cable (TWC) are considering providing funding for a new wireless company that would be operated by both Sprint and Clearwire (CLWR).

The new venture would create a nationwide wireless network using Sprint’s WiMax technology. The goal is to provide high-speed Web access and high-quality mobile video to laptops, cellphones and other mobile devices. Sprint and Clearwire have been working for months on WiMax have looked to raise at least $3 billion for a joint venture.

Comcast, Time Warner Cable and Bright House Networks are rumored to be contributing $1.7 billion to the new company.

This does some very important things:

1- Begins “tying up loose ends” at Sprint for any potential buyer. With all the uncertainty surrounding the effort, potential buyers have been staying at arms length. With this cleared up, a price for the company can be more easily attained.

2- Sprint Network: Sprint already has a far superior network to rival AT&T (T), its problems have been customer service related. As mobile web-browsing becomes more prevalent, the best network has the clear advantage. As this is rolled-out, that will be Sprint.

Rather than listening to Whitworth, Hesse ignored his calls to either abandon, sell or otherwise dispose of the WiMax effort and instead seems to be on the cusp of making it the future of the company.

Good for him…

Disclosure (“none” means no position):None

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Watch “Black Swan” author Nassim Nicolas Talub. This guy makes you think about how the “improbable” regularly happens.

Here he describes the book title:

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It looks like Carl Icahn will get what he want with Motorola (MOT)

Motorola announced this morning it has “commenced a process to create two independent, publicly-traded companies. Today’s decision follows the Company’s January 31, 2008 announced evaluation of the structural and strategic realignment of its businesses and represents affirmative steps to position its Mobile Devices and Broadband & Mobility Solutions businesses for success, while creating value for all Motorola shareholders.

“Our decision to separate our Mobile Devices and Broadband & Mobility Solutions businesses follows a review process undertaken by our management team and Board of Directors, together with independent advisors,” said Greg Brown, Motorola’s president and chief executive officer. “Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus – as well as more targeted investment opportunities for our shareholders.”

Based on current plans, the creation of the two stand-alone businesses is expected to take the form of a tax-free distribution to Motorola’s shareholders, subject to further financial, tax and legal analysis, resulting in shareholders holding shares of two independent and publicly-traded companies.”

It took him a while but the man (Icahn) rarely loses…

Disclosure (“none” means no position):none

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