meredith whitney turns bearish

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luxury hotels elect to downgrade star ratings

luxury hotels are cutting back on services, to the extent that it impacts star ratings, to conserve cash. occupancy rates in luxury hotels have dropped from 71% to 57% in the past year as business travel budgets have shrunk and vacations have been pared back. amenities that may disappear from your favorite five star hotel include:  eliminating the welcome gift, the complimentary newspaper, fresh flowers in your room or 24 hour room service. it has been noted that reducing the amount of food served at the buffet or reducing the temperature of the pool by a few degrees could provide significant savings over time. of course you won’t know that a hotel has cut back until on site as hotel owners have declined to release which hotels have selected to downgrade. but the owner of the ritz carlton in st. louis, lewis wolff, notes, “If a five-star hotel was downgraded to a four star, most people would be just as happy.” i must admit, i’m loathe to disagree. when making a reservation at a luxury hotel, i am anticipating more than a certain level of service but a particular experience.  an experience where no detail is left overlooked and desires are anticipated. not only will customers notice but they will also remember.

goldman gives short term tips to certain clients

goldman sachs is making headlines with the juicy tidbits from their “trading huddles” being shared amongst only their top clients. these weekly trading huddles last about an hour and are more or less brainstorming sessions between analysts and traders where they share ideas and speculate on short term market movement. regulators are concerned that these calls put some clients at a disadvantage. goldman wasn’t offering one set of advice to one group of clients and contradictory advice to another or even short-term advice that contradicted long-term strategy according to steven strongin, goldman’s stock research chief.  but these seem to be quite dubious sentiments. we are meant to be reassured by the fact that traders were not eligible to act on the information until it had been disseminated to clients. but which clients would that be? a spokesperson for goldman has acknowledged that if any information could lead to a revised price target or earnings estimate they would send it to all clients but the discussions were not that pointed.

the sony reader

sony’s reader could give the amazon kindle a run for it’s money. it’s cute. it has a touch screen. seems intuitive. you can purchase books at the sony store, check them out from public libraries or access over a million free books from google. google announced today that over a million public domain books are available for free download in epub. the amazon kindle doesn’t currently support epub but if future electronic readers (apple?) use it – they may need to rethink their strategy.

ben bernanke stays

obama nominates ben bernanke for a second four-year term to begin on 31 january 2010.  obama still has two additional vacancies to fill on the board of governors – not including donald kohn whose term expires in june or gary stern who will retire once a replacement has been named. stern, the longest serving policy maker on the board, and other vacancies will lead to a ‘brain-drain’ at the fed. but bernanke will stay and offer the praised ‘continuity’ of policy. this decision was not surprising and lauded by wall street as most would agree that bernanke saved the country from the brink of financial destruction.

just yesterday in jackson hole, bernanke celebrated central bankers and the role they played in staving off the financial crisis. it was the ‘spooked’ investors that invited panic and the calm bankers who offered liquidity during the credit crisis and creative policies that prevented a virtual collapse. bernanke’s fed is not without detractors, edward hadas at the telegraph writes, ‘a full account of the crisis would lay blame on interest rates kept too low for too long, poor supervision of lending and an excessively indulgent attitude towards financial innovation.’

American Express Earnings Down 48%

“Although it is still too early to point to any sure signs of an economic recovery, the number of card members who are falling behind in their payments, the volume of bankruptcy filings and the level of loan write-offs were better than we had expected.” says Kenneth Chenault, CEO and Chairman of American Express (AXP).

American Express customers spent on average 12% less ($2,667) and increased delinquencies (90 days in arrears) by 10% in the quarter ended 30 June. It has cut costs by 16% through layoffs and shrinking its marketing budget. They’ve retracted credit from some customers and begun to offer certificates of deposit to retail customers. In late 2008, AmEx converted to a bank holding company to participate in the TARP and paid back the $3.4 billion loan last month with a blessing from regulators.

AmEx is a bit different, and perhaps more vulnerable, than most credit card companies. AmEx is both a payment processor and a lender. It makes most of it’s money on transaction fees, like Visa or Mastercard, but also on the spread between the rate at which a customer borrows and then pays back. Some AmEx cards require the balance be paid in full at month end and others allow you to carry a balance forward.

microsoft – weak global pc market?

Microsoft (MSFT), the world’s largest software maker, reported a 29% drop in earnings and a 17% drop in revenue during the quarter ended 30 June  due to weak global PC markets. Clearly, companies have limited their spending in response to the sour economic climate and PCs were no exception. Windows 7 is scheduled to launch on October 22 but Microsoft’s CFO, Christopher Liddell, warns investors not to expect any miracles. Liddell doesn’t envision Windows 7 rescuing the PC market and expresses little optimism until 2010. Which is curious considering Intel’s (INTC) amazing quarter. Just last week, Intel’s earnings pushed the Dow up 257 points. Apple (AAPL) beat analyst expectations with earnings up 12% for the quarter. In fact, Apple just posted their best nonholiday quarter as reflected in earnings and revenue. Looks like the Tech sector is back and Microsoft was not invited to the party.