This Week's Declarations of Independence

Morningstar markets editor Jeremy Glaser on Google, Housing, Banking and Dollar Tree's search for independence.

This Week's Declarations of Independence Jason Stipp: I’m Jason Stipp for Morningstar and welcome to a special Independence Day edition of the Friday Five. Here with me as always with a special July 4th, Friday Five, this Morningstar Markets Editor, Jeremy Glaser. Jeremy, thanks for joining me. Jeremy Glaser: Jason, it’s my pleasure. Jason Stipp: So what do you have for the special Independence Day Five? Jeremy Glaser: This week, we’ll see if Google can find independence in China. If the consumer is spending, there’s going to be fireworks or fizzle. If the house is in recovery can be independent from stimulus, how long banks are going to remain independent from regulation. We’ll take a look at dollar tree’s independent thinking on the American Flag. Jason Stipp: Well Google is in the news a while ago. It's come back recently with China specifically. What’s going on there? Jeremy Glaser: Sure. Google had a very public policy statement. They’re going to stop censoring their Google.cn search results as the Chinese government required them to. So in the meantime, they’ve been redirecting users to go to Google.cn to their Hong Kong site where the results aren’t censored. Now the Chinese government was not thrilled of this idea. And instead they’re now going to send people to their regular Google.cn site. We’ll give them a link back to the Hong Kong site. And no one knows the Chinese government will allow this and will let Google stay as an internet operator in the country. No one is really sure how they’re going to react. This is kind of Google’s last ditch effort to stay in the country. A lot of people think that if they loose that Google.cn domain which is possible if the governments aren’t happy with what they’re doing. They’re going to lose basically all the market share that they have there. It’s not in a trench brand. It could be something to watch out for. It could be a big benefit for buy do for those users end up going there. Jason Stipp: Also in the news this week there were some consumers spending data. It was positive. Well, the doors offer anything but it seem to be a good trend but recently also this week our consumer analyst said that they’re expecting mediocre results so what’s going to allow this consumer? I mean, can we expect anything of note from them for that backup for the year? Jeremy Glaser: We saw a lot of consumer data this week. On one hand, you’re right. The consumer spending data look not great but a little bit better than it had before when they exactly caught fireworks but it wasn’t a complete fizzle. But on the other hand, it gets more confidence just completely sunk. People are not very excited. No one is ready to quite go out there and spend a ton of money on anything really except for the absolute bare essentials. I think our consumer team yesterday has a point that can be very challenging for people to get spending other rates before I think people had put off a lot of purchases they had to make in the first half of the year and right now they’re kind of sitting and doing a way to see and approach. It could be a challenging environment ahead. Jason Stipp: Certainly a lot of market volatility saw didn’t help consumer’s confidence and it may have maybe hindered some of that spending. So for the third piece, housing I think is another important part of the recovery. And it’s still is also looking like cluster and maybe like a little bit of a wet fuse on the economy. What’s the story there? Jeremy Glaser: It’s certainly has been the story of really this entire upturn and downturn has been housing. And S&P occasionally are index, this, that was released this week show that housing prices actually did increase but they believe that almost all that was due to the government stimulus. That being written a check to buy your first or to trade up to another home. Got people out there, brought you forward a lot of housing purchases. But they don’t think this is a sustainable trend. There’s a lot of talk that once it expires which already has that we’re going to see the numbers look for increasingly worst as a chance that people who don’t close right on time, we’re going to get a little bit of extension. Maybe that gives us another month or another couple of weeks of generally better supportive housing market but it could be really challenging. I think the fact that a lot of people are having trouble closing on these housing purchases, shows just how difficult the market is and we really haven’t seen that final all clear that the housing market is stabilized. That it has only bring it go upwards. Jason Stipp: In Washington this week, bankrupt form was on the docket. And it seems like there’s a lot of excitement about it early in the week and that sort of fizzled as well. Jeremy Glaser: It looks like the deal is completely set. It got out of the conference, the house and senate bills were reconciled, some prominent Republicans, ex-cap from the Massachusetts had signed on. But at last minute things really start to fall apart. There’s a lot of trepidation to approve. The fee levying on some of the big banks to pay for some of the bailouts and then with the past Senator Burns who was a yes vote, if the Math got that much more challenging to get to the 60 votes that you need to get pass to the senate. So it looks like it’s going to have to go through at least one more round on machinations, which gives us one more opportunity to kind of change us. It’s going on there and for people to lobby their senators and for there to be even more things that are going to come in and out of the bell. So we’re still not quite sure of financial reform is going to look like, we’re getting closer but I think it could still be a while before we really have the final details hammered out. Jason Stipp: So Jeremy for number five, for the joy holiday shopping at the Dollar Tree, you might have to make an exchange this weekend according to a recent blog post on the consumers. Jeremy Glaser: I think so. So our analyst only gives Dollar Tree two stars. But Dollar Tree seems to love stars. They put 61 on the American Flag that they are selling that looks like maybe we annex Canada or got 11 more state somewhere. This is a very unusual flag which they’re calling a patriotic banner, not a flag because it does quite conform to all of the conditions of a traditional American Flag. So it’s interesting to see some of these products that might not be completely spot on from a quality perspective. But hey, it was a dollar so hopefully somebody got use of their patriotic banner. Jason Stipp: That’s just a forward looking flag. Jeremy Glaser: Yeah. Jason Stipp: Jeremy, thanks so much for joining me. Jeremy Glaser: You’re very welcome, Jason. Jason Stipp: For Morningstar, I’m Jason Stipp, thanks for watching.