The global economic downturn has had devastating effects car manufacturers as consumers worldwide have put off buying new vehicles and have chosen to keep and maintain their current ones. While this has severely affected the likes of General Motors (GM), Ford (F), and Toyota (TM), it provides unprecedented opportunities for auto parts stores, parts suppliers, and auto repair specialists.
The Obama Administration has proposed a program to limit greenhouse gas emissions. Under a “cap and trade” scenario, companies exceeding the set limits could purchase and emission allowances on the open market. Republican detractors label the proposal a veiled tax on business, and predict job losses and further damage to the economy. The Environmental Defense Fund, however, found 1,200 companies in 12 states that would benefit from a carbon cap program resulting in the creation of approximately 5 million “green” jobs.
High-speed rail development is a growing industry worldwide, and President Barack Obama recently committed $13 billion in seed money to the United States’ foray into this hot market. If the federal government follows through with visionary plans for a cross-country high-speed rail system, U.S. companies that specialize in railway equipment, technology and vehicles could get a boost in business for years to come.
The Federal Communications Commission, with the support of the Obama administration, has made a commitment to make high-speed, broadband Internet affordable and available to everyone. This initiative is part of the Obama administrations’ plan to help spur economic growth by creating jobs and encouraging innovation. The companies who are most likely to benefit from the implementation of this plan are AT&T Inc. (T), Verizon Communications (VZ), Windstream Corp. (WIN), and General Cable Corp. (BGC).
The Treasury Department recently announced that it has decided to extend federal bailout eligibility to struggling life insurance companies. Treasury officials are reviewing applications from about a dozen large insurance companies seeking a share of what is left of the Trouble Asset Relief Program (TARP) after the financial and auto industry bailouts. The insurance companies play an important part in US finance and their collapse poses a huge risk to the financial system. The life insurance industry is one of the largest investors in the corporate bond market, holding approximately 18 percent of all US corporate bonds. They also have large stakes in commercial real estate and government bonds. Some of the companies expected to benefit from this bailout include Hartford Financial Services Group (HIG), Lincoln National Corporation (LNC), Prudential Financial (PRU) and MetLife (MET).
The Financial Accounting Standards Board’s (FASB) mark-to-market rule requires firms to report the fair-market value of their assets on a quarterly basis. The valuation is based on the sales price fair market price of equivalent assets. Opponents of mark-to-market contend that in illiquid markets, mark-to-market unduly penalizes companies by making them write-down their assets, thereby exposing them to more financial risks as a result of the unfavorable valuations that result from the ensuing depressed prices. Proponents on the other hand believe that the fair market price is a true reflection of the value of the asset at the time.
The fears of an imminent bankruptcy for both General Motors (GM) and Chrysler are already having effects on their sales numbers. In March, Chrysler experienced a 39% decline in sales, GM experienced a 45% decline in sales and Ford Motors (F) experienced a 41% decline in sales. Overall, the number of units sold currently stands at 9.86 million units on an annualized basis. This pales in comparison to the yearly average of 16.8 million units sold in the last decade.
The Apple (AAPL) iPhone looks so peaceful who’d believe the boardroom wars this hand size device has sparked. Marketed as the Swiss Army knife of cell phones it already had more uses than any other cell when they threw open the gates and gave the application software code up to any comers. The resulting application free for all has made no few garage startup companies enough money to at the very least rent some office space while large companies have either gotten on board or been left in the dust. Now eBay (EBAY) is hoping their purchase of the Internet phone service Skype will finally pay off in its new life as an iPhone application.