2008: Worse than the Great Depression?

NEW YORK (CNNMoney) Ben Bernanke, the former head of the Federal Reserve, said the 2008 financial crisis was the worst in global history, surpassing even the Great Depression.

His statement is raising eyebrows. While the "Great Recession" was scary, there's a reason it wasn't dubbed a depression: Bernanke's aggressive policy response.

"Arguably the financial shocks of 2008 were bigger than those of 1929. The outcome was not as disastrous because the policy responses were quite different," said Jeffrey Shafer, a former Federal Reserve and Treasury official.

The response to 2008 was spearheaded by Bernanke, who has studied and written extensively about the Great Depression and the policy blunders that exacerbated an already bad situation.

His surprising comment surfaced last week in an court document related to the AIG (AIG) bailout.

"September and October of 2008 was the worst financial crisis in global history, including the Great Depression," court documents filed on August 22 quote Bernanke as saying.

While those remarks are receiving attention now, including from The Wall Street Journal, they actually aren't new.

They appear to be pulled from confidential testimony Bernanke made to the Financial Crisis Inquiry Commission in November 2009. That testimony was later included in FCIC's 662-page report, which was released to the public in January 2011. It didn't get much attention from the media or economists at the time.

Depression vs. Recession: "My guess is he meant it was the most complex and widespread deterioration of financial markets," said Mark Gertler, a New York University economist who has written several papers with Bernanke. "I don't think he had in mind that the Great Depression was milder than the Great Recession."

That much is ! clear. During the Great Depression, unemployment spiked to 25%, and the country's output plummeted by nearly 50%.

At its peak, the unemployment rate never climbed above 10% during the Great Recession. That was the highest rate since the early 1980s, but nearly as bad as the 1930s.

"It would be outrageous to say it was a bigger crisis overall, but you could make the case that the shocks were as great," said Shafer.

Complete collapse in confidence: That seems to be Bernanke's point. In his 2009 interview, Bernanke noted that 12 of the most important financial institutions in the U.S. "were at risk of failure within a period of a week or two." Countless overseas banking giants also needed rescues to prevent bankruptcy.

Following the collapse of Lehman Brothers, there was a complete collapse in market confidence. Even companies like General Electric (GE) were struggling to find the funds needed to keep their businesses operating.

"The solvency of the whole banking system was in question. This was a crisis that went beyond anything that our academic Fed chair had ever dreamed of," said David Jones, a former Fed economist and author of Understanding Central Banking.

Ferocious Fed response: The major difference between the Wall Street crisis and the Great Depression is the way the Fed reacted.

While central bankers responded to the 1929 crash timidly and even by tightening monetary policy, Bernanke's Fed knew better.

Bernanke slashed rates lower than they've ever been in the U.S. and then pumped enough liquidity into the system to send the Fed's balance sheet swelling north of $4 trillion today, compared with less than $900 billion before the crisis.

Fiscal policy was also more aggressive. Congress eventually approved the $700 billion TARP bank bailout followed by the $831 billion stimulus package in 2009.

"I think that it is fair to say that if the Fed and Treasury had done nothing and there! had been! no TARP to give them new tools, we could have been looking at a disaster that surpassed 1929-33," said Shafer.

Economists may spend decades debating whether the Great Depression or the 2008 crisis was scarier. Few have the vantage point of Bernanke, who spent his academic career studying the former and lived through the latter.

"It's a judgment call since none of us were in the Great Depression. But if anyone can make that call, it's Bernanke," said Jones.

Markets Hiccup After Seeing FOMC Meeting Minutes

The three major indexes all dropped in unison shortly after the release of the minutes from the U.S. Federal Reserve's July Federal Open Market Committee (FOMC) meeting, reflecting Fed sentiment that accommodative monetary policy could end sooner than expected if improvements continue in the labor market

At 2:15 p.m. EDT, the S&P 500 dropped 4.13 points, the Dow Jones Industrial Average lost 32.99 points, and the Nasdaq fell 7.66 points, all before the three major indexes began to rise again.

While the Fed made no remarks on an explicit timetable for interest rate hikes, which is what the markets are observing attentively, the minutes did indicate that the situation in the labor market was looking healthier and improving quicker than expected.

The minutes also showed that many FOMC members said "it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated" if the economic conditions they monitor begin to converge on their targets.

There also seemed to be language to suggest that inflation would begin to pick up without being derailed by disinflation, as "most now judged that the downside risks to inflation had diminished," as well as many members believing "risks of inflation running persistently below their objective as having diminished somewhat."

Here's what the Fed's agenda will be for the rest of the year...

The Fed's Charted Course for Monetary Policy

As the Fed's playbook stands now, there will be a $25 billion monthly purchase of agency mortgage-backed securities (MBS) and long-term treasuries until the September meeting, when that number will be tapered to $15 billion. And, as minutes from June's meetings suggest, that last $15 billion will be cut and the policy of quantitative easing will end after the meeting on October 29.

The policy of bond buying began in September 2012 as a way to put downward pressure on long-term interest rates and pour more money into the markets at a time when the U.S. economy needed a quick boost amid a slow-growing, post-recessionary period. It began as a monthly purchase of $45 billion in treasuries, and $40 billion in agency MBS, for a total of $85 billion in total asset purchases.

It wasn't until December 2013 that former Fed Chairman Ben Bernanke announced that this stimulative policy would begin winding down with a $10 billion reduction in these purchases. With every Fed meeting to follow, another $10 billion would be cut from the purchases until the program was ended altogether.

The only change to that script came in the minutes from June's meeting, which revealed that rather than cut $10 billion in October's meeting and continue purchasing $5 billion worth of assets every month until a final round of reductions came at the end of the December meeting, the Fed would just cut the final $15 billion after the October meeting.

All in all, the announcements out of the Fed have been predictable, and current Fed chairwoman Janet Yellen has continued to follow the same path that her predecessor Bernanke handed her when he departed from the post in February.

But even the predictable Fed talk can be felt on Wall Street...

How Fed Minutes Move Markets

Fedspeak, no matter how dry and technical, has the ability to move markets because it gives hints as to what the country's long-term monetary outlook will be.

Even on days when positive economic news is released, the major indexes won't move until given direction from the Fed. This happened before the meeting on July 30, when the S&P 500 was down as much as 7.53 points before the FOMC released a statement, despite news of optimistic economic growth expectations. Within an hour of the Fed statement, the S&P advanced 4.56 points.

"The actual numbers are just the latest figures to come out and we always know there's that next round of numbers," Clifford Rossi, executive-in-residence and professor of the practice at the University of Maryland's Robert H. Smith School of Business, told Money Morning. "The Fed is taking this big-picture, long-term view."

While today is not the day of an actual FOMC meeting, Fed policy dictates that the minutes from each meeting be released three weeks after. Today's minutes were from the July 30 meeting.

The release of these minutes tends to reiterate Fed policy to the markets, which has been dovish as of late. The Fed has yet to announce when it expects there to be interest rate hikes from their near-zero levels, or when the central bank will begin offloading the more than $4 trillion of assets it has on its balance sheet.

So far this year, on dates when the Fed releases minutes the S&P has moved an average of 8.13 points or 0.2% on the day. While on average this is almost negligible, the S&P's 7th biggest one-day advance on the year of 1.09% came on April 9, the day of a Fed minutes release.

Is the stock market overvalued like it was before the dot-com bust? Some of the numbers right now are downright scary. Here are some of the concerns over current market valuations and what you can do to profit...

Reselling old jeans on eBay is a great professional move

NEW YORK (CNNMoney) Here's a funny truth about jobs: As much as we tell graduating college seniors and new job-market entries to build their resumes with a nice, clear, linear story, sometimes you're actually much better at the job you end up doing because you've been doing something else for much longer. There are plenty of examples: Steve Jobs's affinity for calligraphy made him think about fonts and design differently. Hakeem Olajuwon and Jason Kidd were both soccer players before they made it big in basketball. Elite athletes like Roger Staubach and Magic Johnson later became CEOs.

But even if we're to accept that experience as a community activist might make you a better business leader — or time spent as an actor or a doctor might prepare you for politics — we tend to be blind to these examples in our own lives. Just last year, I saw something like this hitting close to home: I learned a good friend had been repeatedly buying and then re-selling used clothes on eBay -- a habit curated over a decade. She'd purchase a dress for $80, wear it for a month or two and then sell it for $200. When she did it for fun, it was just so she could "pay Wal-Mart prices for Neiman Marcus clothes." But then she started doing it deliberately: buying at or under value and selling for more -- and she made margins between 15 and 200 percent, every time.

This struck me for two reasons:

First: Her confidence and intuitive sense of what products are worth. She was seeing a picture of cost and value that others missed — and profiting time after time.

Second: It seemed pretty damn familiar. In fact it reminded me of the skill set used by Wall Street proprietary ("prop") traders and investors — the people who power a large segment of the global economy, only they're fiddling with a lot more zeroes. Every day, Wall Street traders do roughly the same thing as my friend: They buy undervalued things and sell them later for higher prices. Only instead of designer bags and shoes, they buy and sell Apple stock, oil, gold or silver and other commodities. And they get paid $5 million, $10 million, even $1 billion a year.

But the underlying skills (save the cheats) are close.

The idea of transferable skills sometimes sounds too good, too optimistic, too outlandish. But I disagree — and so did my friend Edie Hunt, a longtime partner at Goldman Sachs and a former trader, who for years oversaw most of the hiring of traders at the firm. When I floated the idea past her, she said I was completely correct. In fact, she added, she'd spent years trying to point out this very notion to potential new hires, many of whom were women with a knack for at-home trading, assessing value and making smart cash.

This isn't to say that trading is easy — it's not. And it's not considered a midlife career switch for a reason: It takes time to develop cunning, and thick skin to withstand the constant barrage of accountability that comes on trading floors. But if you've been building those muscles of judgment, of valuation, of cost cunning, for some time — and you've got the hunger to think big — this could be game-changing for your future.

Add to that the reality and old wisdom that women day-trade more (and better) than men — and it's a groundbreaking idea. Especially for trading — still a male-dominated corner of th! e historically testosterone-fueled Wall Street — where women make up no more than 5 percent of employees.

Edie said the idea didn't always carry, but when women were reluctant to step into the jungle on the trading floor, she'd insist they shouldn't pass on trading altogether — indeed, she'd urge them to "put down eBay and opt for e-Trade."

Turns out a number of studies back up my hypothesis — and reinforce Edie's position. Online day-trading has huge potential as a cash cow, but studies in the 1990s out of Yale's economics department suggest that many people who do it aren't successful. Except those who already have a record of success. Which is to say that plenty of people who are day-trading all day aren't very good at it, but if you are good at it, there are huge potential margins of return. And eBay might be a brilliant place to get good at it — or at least to find out if you've got the knack.

It's not clear if any of the big banks have picked up on this phenomenon — other than a few folks on the inside, like Edie, who've noticed the correlation. But they should: not least because one of the fastest-growing retailers in the country, fashion store Nasty Gal, started that way; and, as my enterprising friend points out, there are thousands of Nasty Gals out there. Which means eBay could be a rich talent pool for recruiters -- or any smart entrepreneur -- to consider hiring from or looking to for inspiration. And even more importantly: These high-performing eBay traders may not recognize the mad skills they've got — and how valuable they could be if taken to a far more lucrative venue.

Which is funny because trading — at home on eBay or on the floor of a stock exchange — is an exercise in creative entrepreneurship. Or to put it differently: It's all about confidence, about seeing what other people don't dare to. It's not unlike the culture of eBay when it first started. And for anyone who doesn't believe me, they should believe the CEO of eBay, John D! onahoe. I! talked to him about this very idea at a dinner party, and he, too, confirmed what I'd been guessing at — that eBay traders are doing real work, making real money and building skills that play outside the game they might know best.

People will often say no to you before they say yes. Joe Montana was dismissed as a baseball player before becoming America's great quarterback. Not to mention a former Chicago-community activist and freshman senator — whom plenty doubted before his meteoric rise. But here's the exciting takeaway from the story of my eBay-savvy friends: You just might be sitting on a gold mine, literally and figuratively, if you've got the confidence to, well, take your skills and trade up.

Polaris Industries Is A Strong Buy

Polaris Industries (PII), which designs, engineers, manufactures, and markets off-road vehicles, snowmobiles, motorcycles, and small vehicles in the United States, Canada, and Western Europe is a strong buy even at current levels. This article discusses the positives related to the company making it a good stock to own for long-term.

Polaris Industries has surged by 9.8% in the last two trading sessions. The reason for the strong upside is the company's stellar results for the second quarter of 2014 and with higher guidance for 2014; the upside in the stock is likely to continue.

Polaris has been a consistent performer and the second quarter of 2014 is the 19th consecutive quarter of record performance by the company. The company sales increased by 20% to $1 billion, net income increased by 21% to $80 million and the EPS increased by 26% to $.142 as compared to 2Q13. Therefore, the overall results were robust and it contributed to the surge in the stock.

Polaris Industries has been on a sustained growth path through the launch of new products and through innovation and the past record is indicative of a good management and company strategy. The company has recorded 5-year sales CAGR of 14%, net income growth of 27% and EPS growth of 25%. The company's ROA has also increased from 13% in 2009 to 24% in 2013 and the company's ROIC has increased from 26% to 43% during the same period. All these factors combine to make Polaris an excellent fundamental driven stock to invest.

In the near-term, the positive factor will be the company's full year results and the revised guidance. This will keep the stock momentum going. For 2014, Polaris expects the EPS to be in the range of $6.48 to $6.58. Polaris Industries is therefore trading at a forward PE of 22 considering the current price of $146.2 and the higher end of the guidance of $6.58.

I believe that valuations are not expensive with mean analyst estimates suggesting that the company is likely to have an EPS of $7.83 for 2015. This would imply another 19% growth as compared to the likely EPS for 2014. Polaris Industries will therefore continue to grow at a robust pace and a PE of 22 looks fair in this scenario.

Looking at the future growth drivers, I believe that Polaris Industries is doing well in making inroads into international markets and emerging markets can significant contribute to the company's growth in the future. International sales increased by 29% to $592 million in 2013 as compared to $461 million in 2012. Even for 2014, the company expects double digits growth in international sales. Of the company's international sales, the exposure to Asia Pacific is only 14% and the exposure to Latin America is also low at 7%. I believe these will be the key focus markets for Polaris Industries to boost growth.

As a part of their long-term strategy, Polaris Industries has already planned revenue growth in excess of $2 billion through acquisitions and exposure to high growth markets. With a sales target of $8 billion by 2020, focus on high growth markets is certainly critical.

Another interesting point to note is the company's growth in the motorcycle segment. Revenue surged by 107% to $103 million in 2Q14 as compared to $49.9 million in 2Q13. The company's retail sales and dealer expansion contributed to the growth in the segment. This segment of the company competes directly with Harley Davidson (HOG).

I am bullish on Harley Davidson as well for the future, but in the near-term, Polaris Industries has been a clear winner. Harley Davidson has reduced its annual growth guidance at a time when the motorcycle segment is growing at a scorching pace for Polaris Industries. Both these companies however offer a good dividend yield of 1.5% at current market price.

In conclusion, Polaris Industry is in the midst of strong growth and the stock looks attractive for the medium to long-term. Further, the company's growth guidance for 2014 is strong and analyst estimates for 2015 is also robust.

This implies that the company will continue to have strong quarters and investors can consider the stock even at these levels. I do believe that broad market valuations are bit stretched and investors need to buy the stock in a staggered manner to average out on any decline.

About the author:Faisal HumayunSenior Research Analyst with experience in the field of equity research, credit research, financial modelling and economic research

Currently 3.00/512345 Rating: 3.0/5 (1 vote)

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PII STOCK PRICE CHART 149.29 (1y: +36%) $(function(){var seriesOptions=[],yAxisOptions=[],name='PII',display='';Highcharts.setOptions({global:{useUTC:true}});var d=new Date();$current_day=d.getDay();if($current_day==5||$current_day==0||$current_day==6){day=4;}else{day=7;} seriesOptions[0]={id:name,animation:false,color:'#4572A7',lineWidth:1,name:name.toUpperCase()+' stock price',threshold:null,data:[[1374728400000,109.6],[1374814800000,108.86],[1375074000000,108.89],[1375160400000,110.09],[1375246800000,112.14],[1375333200000,115.12],[1375419600000,115.07],[1375678800000,115.14],[1375765200000,115.21],[1375851600000,112.67],[1375938000000,113.49],[1376024400000,113.41],[1376283600000,113.12],[1376370000000,116.39],[1376456400000,115.97],[1376542800000,113.17],[1376629200000,113.61],[1376888400000,112.9],[1376974800000,114.02],[1377061200000,113.4],[1377147600000,112.98],[1377234000000,114.02],[1377493200000,113.54],[1377579600000,109.89],[1377666000000,110.79],[1377752400000,111.1],[1377838800000,109.21],[1378184400000,109.86],[1378270800000,111.12],[1378357200000,112.24],[1378443600000,111.57],[1378702800000,114.73],[1378789200000,121.1],[1378875600000,121.02],[1378962000000,120.6],[1379048400000,121.99],[1379307600000,123.89],[1379394000000,125.68],[1379480400000,126.38],[1379566800000,126.6],[1379653200000,124.77],[1379912400000,125.17],[1379998800000,125.54],[1380085200000,126.11],[1380171600000,128.33],[1380258000000,128.2],[1380517200000,129.18],[1380603600000,130.66],[1380690000000,128.5],[1380776400000,129.73],[1380862800000,134.33],[1381122000000,129.95],[1381208400000,125.98],[1381294800000,124.7],[1381381200000,129.08],[1381467600000,130.37],[1381726800000,131.27],[1381813200000,130.1],[1381899600000,132.47],[1381986000000,132.92],[1382072400000,134.74],[1382331600000,136.03],[1382418000000,130.69],[1382504400000,132.83],[1382590800000,133.07],[1382677200000,133.01],[1382936400000,131.3],[1383022800000,131.88],[1383109200000,130.53],[1383195600000,130.95],[1383282000000,131.09],[1383544800000,133.18],[1383631200000,132.15],[1383717600000,130.27],[1383804000000,126.24],[1383890400000,127.13],[1384149600000,130.24],[1384236000000,130.11],[1384322400000,136.21],[1384408800000,134.03],[1384495200000,134.8],[1384754400000,131.83],[1384840800000,130.53],[138492720000! 0,130.73],[1385013600000,134.46],[1385100000000,133.74],[1385359200000,134.35],[1385445600000,134.12],[1385532000000,133.98],[1385704800000,133.47],[1385964000000,132.99],[1386050400000,133.26],[1386136800000,133.88],[1386223200000,135.13],[1386309600000,135.98],[1386568800000,138.8],[1386655200000,138.76],[1386741600000,134.88],[1386828000000,134.42],[1386914400000,133.83],[1387173600000,135.54],[1387260000000,135.9],[1387346400000,139.91],[1387432800000,139.59],[1387519200000,141.57],[1387778400000,143.21],[1387864800000,142.96],[1388037600000,144.23],[1388124000000,143.33],[1388383200000,145.78],[1388469600000,145.64],[1388642400000,145],[1388728800000,144.62],[1388988000000,143.64],[1389074400000,144.78],[1389160800000,145.5],[1389247200000,144.97],[1389333600000,143.66],[1389592800000,138.97],[1389679200000,140.17],[1389765600000,139.63],[1389852000000,138.11],[1389938400000,136.89],[1390284000000,135.92],[1390370400000,141.36],[1390456800000,137.45],[1390543200000,133],[1390802400000,132.1],[1390888800000,128.12],

Carl Icahn Bets on Hologic; Should You?

In this article, let's take a look at Hologic Inc. (HOLX), a $7.06 billion market cap company, which is a company that develops, manufactures and markets x-ray systems. It operates through four segments: Diagnostics, Breast Health, GYN Surgical and Skeletal Health.

Two differences

Two things are really important and characterized this company. First, the company´s structural competitive advantages as well as its management turnover, are making a difference in the market. Hologic controls 65% of the U.S. digital mammography market. In 2003 the firm sold its first FDA-approved digital mammography system in the U.S. A potential upside driver includes faster than expected tomosynthesis adoption. Tomosynthesis is a new technology to produce (3D) images. The firm was the first to offer a 3D digital system in the U.S. taking advantage over its peers, such as General Electric, Agfa, Siemens, Philips and Johnson & Johnson.

Acquisitions and more

In 2012, it acquired Gen-Probe, a leading maker of molecular diagnostic products, searching for cost synergies. Moreover, Gen-Probe´s products are ideal to penetrate regions with good prospects to grow (BRIC countries). The Diagnostics products segment has reported a strong increase with a growth of nearly 100%, and we expect much more upside potential in this segment.

Following that acquisition, the firm also holds privileged positions in a host of diagnostic tests catered to women's health that run solely on its proprietary instrumentation.

Forward looking

Hologic will be capable of navigating the stabilization of Pap smear volumes as its lab instrumentation continues to gain traction, and it broadens its testing menu.

Hologic plans to expand in emerging markets, promising countries such as China, which should provide with a new growth catalyst basically because of two thing: the growing middle class and the aging population.

Revenues, margins and profitability

Looking at profitability, revenue growth by 1.03% led the earnings per share increase in the most recent quarter compared to the same quarter a year ago ($0.04 vs -$0.04). During the past fiscal year, the company reported poor results of -$4.33 versus -$0.27 in the prior year. This year, Wall Street expects an improvement in earnings ($1.45 versus -$4.33).

Finally, let´s compare the best measure of performance for a firm's management: the return on equity. The ROE is useful for comparing the profitability of a company to that of other firms in the same industry.

Ticker	Company	ROE (%)
HOLX	Hologic	-60.41
ALR	Alere Inc.	-3.43
GE	General Electric	10
	Industry Median	8.68

The company has a negative current ROE which is a weakness of the company. In general, analysts consider ROE ratios in the 15-20% range as representing attractive levels for investment. It is very important to understand this metric before investing and it is important to look at the trend in ROE over time.

Relative Valuation

In terms of valuation, the stock sells at a price-to-book ratio of 3.5x which indicates a premium versus the industry average of 3.02x while the price-to-sales ratio of 2.79x is above the industry average of 2.91x.

As we can see in the next chart, the stock price has an upward trend in the five-year period. If you had invested $10,000 five years ago, today you could have $17,911, which represents a 12.3% compound annual growth rate (CAGR).

Final comment

I think the Health Care Equipment industry will remain profitable in the long term as there is an increase in the age of the population. It is important to mention that Hologic offers the only FDA approved breast tomosynthesis platform and this is really good because digital platforms are popular and demanded.

Hedge fund gurus like Jim Simons (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) added this stock to their portfolios in the second quarter of 2014. Should you?

Disclosure: Omar Venerio holds no position in any stocks mentioned

Also check out: Carl Icahn Undervalued Stocks Carl Icahn Top Growth Companies Carl Icahn High Yield stocks, and Stocks that Carl Icahn keeps buyingAbout the author:ovenerioWe provide independent fundamental research and h

Intercept Pharmaceuticals: Curb Your Enthusiasm?

It’s always exciting when a stock quadruples in value, as Intercept Pharmaceuticals (ICPT) has this year. But are investors too excited? FBR’s Andrew Berens and Thomas Smith think they are:

Steve Remich

We are initiating coverage of Intercept Pharmaceuticals, Inc. with an Underperform rating and a 12-month price target of $172 per share. We believe investors are much too optimistic about the accessibility of the nonalcoholic steatohepatitis (NASH) market and the regulatory pathway to commercialization. We agree that NASH is a highly prevalent disease globally but see this potential market as facing significant challenges before it can be accessed. We think payors are unlikely to embrace intervention for NASH, especially given the anticipated hepatitis C (HCV) burden on the system. NASH would be competing with HCV for payor dollars and provider access, as both diseases are treated by hepatologists.

Furthermore, unlike HCV, which is cured after one course of treatment, NASH is likely to require chronic therapy. NASH is also a relatively unrecognized disease with no treatment paradigms, necessitating building the market. Despite compelling efficacy, we do not think the FDA is likely to approve obeticholic acid (OCA) without an adequate safety database, making an accelerated approval unlikely in the time frame expected by investors. The co-morbidities in this patient population are too significant, and the lipid changes with OCA are concerning, especially in light of the reported cardiovascular events disclosed in the top-line FLINT data release.

Shares of Intercept Pharmaceuticals have dropped 3.2% to $286.78 at 2:40 p.m. today.

Now Take Deep Breath: MannKind Finds A Partner for Afrezza

There a saying among health-care investors about investing in companies that are developing exciting experimental drugs that goes like this — Buy the approval sell the launch. n other words, ride the share price higher amid excitement over clinical trial results and bullish sales but get out before the stock falls back to earth when the launch doesn't live up to expectations.

Until today, that advice suited MannKind (MNKD), the biotechnology company that received FDA approval on July 1 for its inhaled insulin, Afrezza. At the time, Barrons.com advised caution, warning that risks with the drug would make marketing it difficult and MannKind could have a hard time attracting a partner to help with an early 2015 launch.

As of the closing bell on Friday, the shares had fallen 25% to $8.13.

Guess what? MannKind has found a partner. It announced a deal with Sanofi (SNY) early today, sending its stock climbing more than 20% in premarket action. Those gains got parsed, however, with the stock recently trading at $8.53, a 4.7% rise above Friday's closing price.

The deal will get Affrezza onto the U.S. market by the first quarter of 2015. It also alleviates cash concerns at MannKInd, which had $42 million in cash at the end of the second quarter.

Sanofi makes out as well. Analysts at MLV & Co say Sanofi's rapid-acting insulin Apidram, approved in 2008, lags other similar medications, and Afrezza fulfills a weakness in the French drug maker's diabetes franchise.

Sanofi, however, will have its work cut out for it. The next big challenge it fact will be convincing drug insurers to give Afrezza a good spot on their drug formularies, which determines reimbursement and how much patients must pay out of pocket. A big copayment could hurt sales.

The partnership news isn't doing much of Sanofi's stock price. The US-listed ADRs are up 0.1% to $28.37.

Past efforts to develop inhaled insulin have ended in failure. Pfizer (PFE) crashed and burned with its inhaled insulin Exubera.

Crocs Has Indeed Lost Its Mettle

People's tastes and preferences keep changing with the changing times. So was the case with the footwear industry, when Crocs' (CROX) fancy and new style shoes took over the market. Customers became highly fascinated with the new style of resin-molded shoes which came in a variety of bright colors. It became a fashion statement. However, a few years later, this fascination started to fade away as customers got bored of the same old style. Crocs' footwear became tacky for the same lot of customers. This resulted in sharp decline in the retailers' revenue.

Therefore, the company is still struggling to overcome the after effects of the situation. But this time Crocs wanted to differ. Its recently reported second quarter results were ahead of the Street's estimates, enabling its share price to move north.

Numbers accompanied with restructuring plans

The footwear retailer's revenue inched up slightly to $363.8 million from $376.9 million in last year's quarter. The top line was higher than the analysts' estimate of $372.8 million. Even the bottom line was higher than the estimates, clocking in at $0.36 per share. However, this was lower than the prior year's EPS of $0.48 per share.

The primary driver of sales increase was revenue from Europe, which surged 20% during the quarter. This contributed to the top line since both North America and Europe are the key markets and make 85% of the overall revenue. On the contrary, sales in the regions such as Asia were weak. For instance, revenue from Japan dropped 9.4% to $41 million. Therefore, the company plans to reduce its investments in such smaller markets, including China, Japan and Korea.

What the turnaround plan entails?

Crocs announced its plans to restructure its business in order to make it more profitable. It has become quite evident from its second quarter numbers, that the retailer has mainly hit on the bottom line. In order to boost its earnings, it has firstly decided to cut jobs. This job cut is expected to save $4 million in this year and $10 million in the year 2015.

It will be closing or converting 75 to 100 stores and will lay off 183 workers, in order to grow its net income. The converted stores will remain Crocs stores, but will be run by third party operators. Although the store closures would reduce the revenue base, but will also result in a cost saving of $17 million to $25 million.

Further, it plans to change its product portfolio by cutting down on its shoe styles by 30% to 40%. It will now focus on the signature designs only such as flip flops, sandals, classic clogs and flats. It will also focus on styles like high heels and leather boots.

What is also important for Crocs is to bring in new products, which will attract customers to its stores. Innovation has been key to footwear retailers' success. For instance, Nike (NKE) has been able to register growth and create demand by bringing new technological advancements, which force customers to own Nike products. Continuous strive to introduce products such as FuelBand, Nike Free and many more, have been instrumental to its growth.

Summary

Although Crocs is on the right track to control costs, it is difficult to say how far it will be beneficial in the longer term. Not only costs, but also revenue should be taken care of. In order to do that, it is important for the retailer to have new products in its stores. Therefore, investors should stay away from this company.

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What We Learned from Being Mystery Shoppers

Patrick Strattner/fStop Images We always seem to be looking for ways to make extra money. All the better if we can earn it in ways that fit our schedule and keep us out of another office. One appealing way is mystery shopping -- going to a store or restaurant, oftentimes getting wined and dined for free, and then filling out a survey rating your experience. Seems easy, right? There's more than meets the eye to this covert work. We know because we tried it out for a couple of months when we were living in New York City. Here are some considerations when it comes to deciding if mystery shopping is for you.

Why This Sapphire Supplier Looks Like a Good Long-Term Opportunity

GT Advanced Technologies (GTAT) posted poor results last quarter. The declining revenue and a weak performance in the sapphire segment is impacting GT's market share. The poor results failed to impress investors. However, GT is trying to get better, and with a strong earnings CAGR of 47.90%, it might prove to be a better investment for the future.

Quarterly performance

GT's quarterly revenue fell on a year-over-year basis. It also missed analysts' estimates. Investors were disappointed with the results, and the stock fell. So, GT is off to a soft start. However, GT is gearing up to deliver solid performances in the long run, and the anticipated growth trajectory of its business is consistent with its long-term targets.

GT is confident of growth in the future for many concrete reasons. With the changing dynamics in the market, the company is seeing positive response for its ASF, Polysilicon, HiCz and DSS offerings. With the demand for these solutions strong, the company is aiming for better revenue. Moreover, GT is focusing on innovations. It is bringing several new technologies, in combination with its next generation solar products. These robust moves are expected to help GT in gaining more traction in the market, raising its market share.

Looking ahead

As the company witnessed weakness in the sapphire segment, it is now focused on improving this segment to make it competitive. In line with this strategy, GT has announced that it is making its next generation ASF(R)165 sapphire growth furnace for producing high volume and high-quality sapphire material, which will be commercially available this year. This move by GT in the sapphire segment will help it tap new markets as the new system will deliver a 40% increase in boule size as compared to older versions of ASF115. This will also help in extending GT's leadership position as a provider of low-cost high-quality sapphire production tools.

Moving forward, GT is also aligning its workforce toward Arizona to complete the sapphire project. With the advances made by the company in Arizona, it is expecting a sharp production ramp up to start soon. This will help GT improve its services.

Also, the company is maintaining a healthy cash position. It has received 3 out of 4 prepayments from Apple until now. This is good news for investors, as with a good cash position, GT might make improvements in the dividend offering. The company might go for this strategy to improve its market share.

More catalysts

Moving to the other segments, GT is seeing improving demand in ASF. The company is targeting LEDs and the industrial market. Also, the acquisition of Crystal Systems in 2010, which added the ASF sapphire system to its portfolio, vaulted GT into the LED and industrial sapphire markets. In LEDs, the company is seeing good demand. It has new products in its pipeline in this segment, such as HVPE and PVD tools, which it is planning to launch by 2015.

The addition of the materials business is a smart move by GT, which will further expand its market opportunity. In addition, GT is planning to continue its three-dimensional diversification and expansion strategy. This strategy will include exploration of a high-growth market , maintaining cost effectiveness, and improving the technological advancement.

Conclusion

GT is not in a sound position now. However, the company's prospects look strong. It expects the coming year to be a transition year in the sapphire segment

Time Warner Shareholders Get Outfoxed

Popular Posts: 22 New Stocks to Watch – Mobileye, Synchrony Financial & MoreSpaceX IPO Rumors – Real Stock Launch or Science Fiction?How Venture Capital Revolutionized U.S. Businesses Recent Posts: Time Warner Shareholders Get Outfoxed Sirius XM – Investors Should Start to Tune Into SIRI Stock TripAdvisor Investors Get Queasy (TRIP) View All Posts Time Warner Shareholders Get Outfoxed

Playing M&A can be dicey, and investors got a harsh lesson in this today, as seen with the 11% drop in Time Warner (TWX) stock.

If anything, Wall Street thought that 21st Century Fox's (FOXA) Rupert Murdoch was going to pump up his bid for the media operator, say to $90 or $95 per share (the initial offer was for $85 per share or roughly $80 billion). But instead he suddenly walked away from the deal, and now it looks like he may never come back.

Yet even with all the drama, there may still be a good opportunity with TWX stock.

Now it's true that a combo of Fox and TWX would have been powerful. After all, there was a potential to create a true rival to Disney's (DIS) ESPN. Fox has lucrative contracts with the NFL, MLB and Nascar while TWX has deals with the NBA, college basketball and PGA.

For the most part, major advertisers continue to pay substantial amounts for live sports events because there usually is little commercial-skipping. But there are also opportunities for better engagement, such as with the "second screen" phenomena of Twitter (TWTR) and Facebook (FB).

But perhaps the biggest play with a TWX-Fox merger was the idea of building a Netflix (NFLX) killer. At the heart of this would be Time Warner's HBO, which has more than 28 million paid subscribers and has a long history of creating standout content like Game of Thrones and True Detective.

A merger would also provide some leverage with cable operators, which have been focused on dealmaking. Two recent examples of this include Comcast's (CMCSA) $45 billion deal for Time Warner Cable (TWC) and AT&T's (T) $48.5 bid for DirecTV (DTV). But there is also the rising power of new distribution platforms like Netflix, Amazon (AMZN) Prime and perhaps even Apple (AAPL).

So why on Earth did TWX say "no" to the deal? Perhaps part of the reason is the inevitable complications of getting regulatory authority. And even if a deal got approval, the process would have been a prolonged distraction.

But Time Warner also has a bright future as an independent company. Keep in mind that the company has been doing the heavy lifting of streamlining operations. Just look at the spinoffs of assets like AOL (AOL), Time Warner Cable and Time (TIME). At the same time, TWX has been focused on share buybacks and dividend increases. The current yield is a decent 1.9%.

And yes, TWX continues to have a winning hand with its movie studio. Some of the recent hit films include Gravity (which won multiple Oscars) The LEGO Movie and The Hobbit: Desolation of Smaug. Granted, the company still has work to do as TNT and CNN continue to lag. But TWX is certainly making the necessary investments to turn things around.

In fact, TWX reported its second-quarter earnings today and the results were solid. Profits grew by 10% to $850 million, or 95 cents per share (98 cents per share on an adjusted basis), while revenues increased by 2.7% to $6.79 billion. A key driver continued to be HBO, with revenues up 17%. The division got a nice boost from licensing content to Amazon.

So at 16 times earnings, TWX is also trading at a reasonable valuation. Consider that FOXA is at 24X and CBS (CBS) trades at 18X. Besides, Time Warnerbelieves that its earnings will grow at a low-to-mid-teen rate for the next three to four years. In other words, the recent plunge really does look like a nice entry point for the stock.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Top 100 SAT Scores Ranking: Which Colleges Have The Brightest Kids?

As someone who has spent more than a few hours both visiting colleges as a potential customer and, as a reporter, covering the economics of higher education (see my latest story), you sometimes get the sense from admissions officers and even some parents that hanging too much on  SAT scores is not only a mistake, but politically incorrect.

After all, it has been proven that kids from wealthy families, who can afford SAT prep courses and often go to more competitive high schools, tend to get higher scores. The test is biased towards the affluent and it is often argued that a student's high school record and GPA are more predictive of academic success. Indeed, a growing number of colleges are adopting SAT/ACT optional policies.

Despite all of this negative noise, standardized tests like the SAT still matter a lot to highly selective colleges. Two biggest reasons:  1) It is an effective way to screen out students when the number of  applications is overwhelming (Stanford reported 42,000 applications for roughly 1,700 freshman in the Class of 2018), and 2) Colleges admissions offices care a great deal about popular rankings like U.S. News & World Report's and tests like the SAT have a fairly significant weighting in the formula. For executives running admissions offices at top colleges, moving up on U.S. News list is almost always recognized by the Board of Trustees, and this can mean good things during  bonus time. (Forbes own college ranking (see here) doesn't consider SATs)

The SAT and the ACT standardized tests cut through the smoke and mirrors created by different high school grading schemes and the fluffing of extracurricular activities. While officials at the Collegeboard would never call the SAT an Intelligence Quotient Test,it, in fact,was first developed as an Army IQ test in the 1920s, and it continues to correlate strongly with IQ tests. The most Collegeboard will currently say about the exam is that it is designed to assess academic readiness for college, measuring verbal reasoning and mathematical reasoning.

After witnessing first hand how much time and money parents spend, and the angst they endure, on things like high school sports or extracurricular activities or summer teen programs, I think test-only admissions policies might actually put an end to some of the madness going on at high schools these days. For some communities, like suburban New York City and Philadelphia, the $250,000 spent for four years at a private institution, is merely the culmination a flood of spending leading up to college acceptance.

In other words, you may think that the $4,000 you spent for junior's community service vacation in Costa Rica will make all the difference to his top choice college, but in reality a summer at home studying for the SAT could have a better ROI.  Like it or not SAT scores remain the critical yardstick for top colleges and as it turns out a number of leading businesses like Goldman Sachs, McKinsey & Co and hedge fund DE Shaw, actually want to know the SAT scores of the young candidates applying for jobs.  As a parent, you should also seek out  high SAT score schools for your kid because these "brighter" kids from affluent families often wind up creating better networking opportunities down the road.

So which colleges have students with the highest SAT scores? Below you will find an unfiltered ranking of the top 100 average SAT Critical Reading and Math scores reported to the government for the academic year starting in Fall 2013. ACT Composite scores are also listed for each school. The scores displayed are an average of 25th percentile and 75th percentile  scores so those  students in the college hunt would be wise to target schools where their own SAT scores are at least as high as those reported.

See below for 100 colleges with the highest SAT scores.

U.S. Steel, AK Steel Trending Higher Following Earnings Beat

Related X Stocks Lower As Earnings Season Takes Back Seat To Geopolitical Uncertainties Earnings Scheduled For July 29, 2014

U.S. Steel (NYSE: X) is making its biggest one-day move in three years after reporting a massive earnings beat. On top of that, revenue beat Wall Street's expectations for the first time since early 2013.

The stock recently traded at $32.75, up 18.3 percent.

AK Steel (NYSE: AKS) shares are also trading about 3.3 percent higher following its better-than-expected second quarter report.

These reports have put several other steel companies in play.

Steel Dynamics (NASDAQ: STLD) shares are up 0.44 percent Commercial Metals (NYSE: CMC) shares are up 0.34 percent ArcelorMittal (NYSE: MT) shares are up 1.77 percent China Precision Steel (OTC: CPSL) shares were up 2.7 percent

Posted-In: Earnings Commodities Markets Trading Ideas

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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