A Tough Day
Research for Online Investors

by John Dalt

8/31/11

The U.S. Justice Department filed suit this morning to block AT&T’s deal to buy T-Mobile for $39 billion dollars. A Justice Department spokesman said the merger would reduce competition and result in higher prices, fewer choices and lower quality for consumers. AT&T said they would seek an expedited hearing so the “enormous benefits of the merger can be fully reviewed…the government has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter.”

Verizon, AT&T, T-Mobile and Sprint have 90% of all U.S. mobile wireless connections.  Deutsche Telekom, the owner of T-Mobile, has said they would not put more money into T-Mobile.  The costs of competing against Verizon and AT&T are too high for the smaller company.  If AT&T’s acquisition of T-Mobile were successful they would become the largest wireless company followed by Verizon.  Sprint would be a distant third place competitor.

Let’s see...blocked mergers, EPA regulations to cripple coal fired electrical generation, NLRB complaint against Boeing, slow-walk on drilling permits in the gulf, Obama care with higher taxes, Dodd-Frank financial regulations.  These all sound like job generating rules, regulations and laws.  We should be on the path to prosperity.

Daryl Hannah, actress, was arrested yesterday outside the White House in a protest over the Keystone XL Pipeline project.  We have reported on this critical pipeline previously in MarketToday.  The pipeline will carry crude oil from Canada’s Oil Sands to refineries on Texas’s gulf coast.  It is under review by the State Department since it crosses the international border.  Today, Nebraska Governor Dave Heineman sent a letter to Secretary of State Clinton urging the government to deny a federal permit.  He is concerned about possible contamination of the Ogallala aquifer that is under the pipeline route.

Daryl Hannah said the protesters want to be free from dependence on fossil fuels.  No word on how she got to Washington.  The Nebraska governor didn’t explain how farmers were going to work their fields or the states citizens would get to work without oil.  Little details.

If the XL pipeline is not built, the Chinese are anxious to buy the oil at the end of an existing pipeline at the Pacific coast.  Ms. Hannah said, “We stand here today to just say no to slavery, to just say no to tar sands, oil and no to the Keystone pipeline.”  Where did the slavery come from?

MBA mortgage applications numbers dropped in their report this morning.  Last week, applications were down 2.4%, this week down 9.6%.  Mortgage applications tell us how many new homes have been put under contract, so are good indicator of future sales.  ADP Non-Farm payroll numbers added 91,000 jobs last week, less than the 103,000 the market was hoping for.  The Chicago Purchasing Managers Index (PMI) was better than expected at 56.5  Any number over 50 means growth is being reported.  Factory orders jumped 2.4% in the last month.  This was much better than the 1% growth expected.

We have a short article today as we have been busy in the market.  I am also distracted as our family dog, Trixie, is close to death from old age.  She has been a good companion to me and protector for our family.  I will miss her wagging tail.  No matter how tough a day I had, she always came bounding across the lawn to get a pat on the head when she saw me.  I hope you are as lucky as I have been to have a pet that makes problems melt away by just being a friend.  I am sad and will miss her.

Mailbag:
For 35 yrs. I worked for a company built almost entirely through mergers and acquisitions with revenues of $14 Billion. If there is one thing I learned after all those deals, it is this... You can't take two dogs and make a cat.  Anyone that believes those Greek, Italian, Irish or Spanish banks will be around in their present form a year from now - has no clue of the problems they are facing. All dogs!—Long-Term subscriber C.W.

John’s reply:  When you combine to piles of s/*t, you don’t end up with gold.

Thanks for the link to Bernanke’s speech at Jackson Hole.---subscriber T.M.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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