What's Important in the Financial World (6/29/2012)

In another sign that the recession in the European Union has spread well beyond the weakest nations, retail sales fell 1.1% in Germany in May. The Federal Statistics Bureau issued a report that showed:

According to provisional results retail turnover in May 2012 in Germany increased 1.0% in nominal terms and decreased 1.1% in real terms compared with the corresponding month of the previous year. The number of days open for sale was 24 in May 2012 and 26 in May 2011.

The news likely will prompt Angela Merkel and many of the nation’s politicians to pause again and reconsider the substantial billions of euros the country has put into bailout funds for Germany’s neighbors. Pulling back on these commitments may help Germany avoid higher tax rates to support these funds and new levels of austerity within the country. However, stimulus measures for the balance of the region are meant to increase economic activity. This may help increase German exports and calm consumers who believe Germany has been pulled into the areawide recession.

RIM and Microsoft

Research In Motion’s (NASDAQ: RIMM) board may have no other choice than to make a last-ditch effort to save the company through an alliance with Microsoft (NASDAQ: MSFT), Reuters reports. Microsoft could make a large investment in RIM that may stop the nosedive of its shares. And the world’s largest software company has nearly unlimited technological and marketing capability. The cost of a relationship with Microsoft would be substantial. The software company almost certainly would force RIM to give up its own operating system, which it has used since the first BlackBerry was launched. In its place, RIM would use the Microsoft Windows mobile OS, which has struggled to gain adoption against Google’s (NASDAQ: GOOG) Android and Apple’s (NASDAQ: AAPL) system. Microsoft already has made an attempt to increase its mobile footprint through a joint venture with the world’s second largest handset company. But Nokia (NYSE: NOK) has had nearly as much trouble selling smartphones as RIM has. Microsoft also is attacking the mobile market with its own tablet PC. If Microsoft can coordinate these three efforts to get mobile adoption — RIM, Nokia and its Surface tablet — it might finally break though in the mobile sector.

Anheuser-Busch Buys Grupo Modelo

The world’s largest brewer just got much larger. Anheuser-Busch InBev (NYSE: BUD) will buy the half of Grupo Modelo is does not already own. The price is $20.1 billion. Grupo Modelo is based in Mexico, and by some measures has most of the market for beer in that country. It also exports several products that are popular in the United States, such as Corona. While the deal picks up more revenue for Anheuser-Busch, it probably does not have the economies of scale that many buyouts have. Grupo Modelo’s operations are in Mexico, far from most of Anheuser-Busch’s operations in the U.S. and Europe. And the markets for Budweiser and Corona may have little in common, which means advertising budgets will remain intact.

Douglas A. McIntyre