What's Important in the Financial World (2/14/2012) Moody’s Downgrades Europe, New Apple Products

The relentless attack by U.S. credit rating agencies on the risk of the sovereign debt of EU members continues. It happened again yesterday when Moody’s downgraded a number of nations just after a deal was set for another bailout of Greece. The possible improvements in Greece’s fortunes did not affect Moody’s at all. Small nations like Slovenia, Slovakia and Malta had their ratings cut. But the focus of the actions was on nations that could wreck the region’s finances if they moved toward default. Spain was downgraded two notches to A3 as it struggles with unemployment, problems in its banks and regional states, and a new recession. Portugal and Italy, recently the focus of worry about the viability of their debt, were also cut. And, just as troubling, Moody’s threatened the AAA ratings of the UK and France, the two largest economies in the region after Germany. Moody’s does not think the EU sovereign debt issues are even close to solutions.

iPad Rumors

There were more rumors about Apple (NASDAQ: AAPL) product releases. One is that Apple will introduce a tablet PC with a screen smaller than the one on the current iPad. Presumably, this would let the large consumer electronics company better compete with products like Amazon’s (NASDAQ: AMZN) Kindle Fire. The other widely published rumor is that AT&T (NYSE: T) and Verizon Wireless will soon offer iPads that run on their ultrafast 4G networks. Since Apple does not have a 4G-enabled iPad, it would have to set a major product release to market one.

Apple at $500

The biggest financial news from yesterday was that Apple’s stock price rose above $500 for the first time. The fact was meaningless. It is no more important than if the stock was at $499 or $501. But the fascination indicates that Apple news can still push other, more important financial news out of the headlines. The Greek debt settlement and deficit aspects of the new budget were pushed down the page at many business websites.

A Google “Ecosystem”

The U.S. and Europe approved the Google (NASDAQ: GOOG) buyout of Motorola Mobility (NYSE: MMI). Now, Google will be able to answer the question of whether it can run a hardware company as well as it does its search business. Many analysts believe that Google wants to build a product “ecosystem” like Apple’s. This system is one from which the consumer can get content, operating software and hardware bundled together. Google already has a foothold in the mobile operating system industry with its extraordinarily popular Android OS. However, in Motorola it will own an also-ran in the smartphone business — one which may find it impossible to catch market leaders Apple and Samsung.

Douglas A. McIntyre