Top News on Jan. 10 that You Might Have Missed
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Strong market performance topped the news on Thursday as the S&P 500 sat atop multi-year highs. However, there was loads of important news that hit the wires on this day, some of which you may have missed. Therefore, let’s take a look at a few of the top stories today, both company and market related.
Mortgage Requirements Could Slow Real Estate: But Banks Thrive
Despite lawsuits, layoffs, and upcoming catalysts that could force further regulations, banks have rallied from their 2011 selloff to trade at 52-week highs. These gains have been a result of bright spots in the housing market, yet on Thursday the Consumer Financial Protection Bureau laid out some new rules, although good rules, that could limit the lending practices of banks.
According to the new rules, borrowers can not borrow more than 43% of their gross income. This means that the price of a monthly mortgage combined with taxes and insurance can not be greater than 43% of a person’s monthly income after all debts are paid (car payments, credit cards, loans, child support, etc.). There are many banks that have already begun to implement these practices; therefore this rule should eliminate the “toxic loan products.” Ultimately, this rule means a better loan for consumers and possibly less revenue for the large money center banks, who write mortgages with their eyes closed.
U.S. Making Major Cuts in Healthcare
On Wednesday UnitedHealth Group made headlines when it said that the government could save $500 billion in Medicare and Medicaid costs over the next 10 years, by integrating treatments and better coordinating medical care. This was viewed as a positive for the government but also a concern, as investors know that those costs will have to be taken from somewhere. Therefore, it was a massive shock when the nonpartisan Commonwealth Fund argued that the savings could be $2 trillion over the next decade, four fold the expectations of UnitedHealth. The biggest reason was their belief that payouts will be tied to outcome rather than services (medical treatment and drugs). This has long been debated by politicians but could have a huge impact on both pharma and hospitals.
Amazon and Google Prepare to Tackle iTunes
It’s no secret that the music industry is dominated by Apple (NASDAQ: AAPL), and up until recently, no one has challenged the tech giant. Last December Google (NASDAQ: GOOG) announced an “iTunes match clone,” which uses the cloud to scan a user’s collection of music and then makes copies that are available through the cloud. Apple charges $25 a year for its iTunes match, but Google Music’s service is 100% free. Reportedly, Google is paying huge upfront fees to the music industry, therefore is most likely looking to benefit through advertising.
So what does Google Play have to do with news on Thursday? It’s relevant because Amazon (NASDAQ: AMZN) unveiled a new service on Thursday called “AutoRip,” which automatically gives CD buyers free MP3 copies of the purchased tracks. Right now, there are over 50,000 albums available for AutoRip. Therefore, when combined with Google’s new service, it’s very possible that the two combined could take some market share from Apple.
The Long-Awaited China Mobile/Apple Agreement May Be Near
Music is not the only segment that Apple could be sharing -- apparently it has been losing market share in China to Samsung for quite some time. One of the big reasons is due to Apple’s inability to partner with the largest wireless provider, China Mobile. However, Apple is now meeting with China Mobile to discuss a deal so that China Mobile could sell the iPhone. If successful this will be a massive catalyst for Apple, a partnership that could add significant top-line growth.
Ford Gives Back 100%
The final big news of Thursday was related to Ford (NYSE: F), a stock that has rallied 48% in the last six months and has given investors all the indications that it’s one of the true bright spots in a slow-growing economy. Back in late 2011 the company announced that it would implement a dividend, but on Thursday the company increased its dividend by 100% to pay a forward yield of 2.96%. Therefore, Ford is now a high-yield investment, which should add significant value to the stock over the long term.
On Thursday some of these developments flew under-the-radar, but others did not. Developments such as these ultimately dictate the direction of a stock, both short and long-term. Therefore, it’s important that investors are aware of these developments and then, with additional due diligence, use the information to make an educated investment decision. With that being said, stay tuned to whatever happens next, and for the top news of Friday.
BrianNichols owns shares of Apple and Ford. The Motley Fool recommends Amazon.com, Apple, Ford, and Google. The Motley Fool owns shares of Amazon.com, Apple, Ford, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!