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Cable TV, Coffee, and High-Rise Indicators

Jason Stipp

Jason Stipp: For Morningstar, I'm Jason Stipp, and welcome to the Friday Five. This is our look back at the week's most interesting headlines for investors. Here with me, as always, with the Friday Five is Morningstar markets editor, Jeremy Glaser.

Thanks for joining me, Jeremy.

Jeremy Glaser: You're welcome, Jason.

Stipp: So what have you got for the Five this week?

Glaser: We're going to take a look back at Black Friday. Bank of America is finally repaying their TARP funds. Comcast takes a bite out of NBC/Universal. Some interesting developments brewing in the coffee M&A market. And finally, we're going to take a look at Dubai and see if maybe they were trying to send us a signal that not everything was all right.

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Stipp: So let's take a look at Black Friday first. How did those sales turn out to be?

Glaser: Sales were a little bit better than they were the year before, not that surprising, given how awful the fourth quarter of 2008 was. And the thing that was interesting is there were a lot more people shopping, but they were spending less money.

I think a lot of people are going to look under their Christmas tree this Christmas and see that they have more presents, but they're going to be worth a little bit less than they had been in the past. People seem more focused on paying off their credit cards than adding more debt to them.

Stipp: So speaking of paying off things, Bank of America is paying back some TARP funds, which was taken as a pretty good sign for them. What is your take on that?

Glaser: Yeah, I think it is a good sign, that they're able to go out into the private market and raise the capital they need instead of having to rely on the government. I think that is definitely a sign of strength for them.

However, there are still a lot of other companies that need to pay that back. We look at AIG. We look at Citigroup. We look at General Motors. These are a lot of companies that are in big trouble. General Motors fired their CEO this week, somewhat surprisingly. I think it could be a while before they get off the government dole, too, and I think it's something that we're going to need to keep an eye on.

Stipp: Also in corporate news this week, Comcast making a bid for NBC/Universal. We commented on this a little bit earlier, but what's your take on that?

Glaser: I think generally it's probably not going to be a big deal for Comcast, but they're definitely paying a lot of money for NBC. And it is an asset that, really, the network itself is not doing so hot. These are the people who decided that Jay Leno should be on five nights a week instead of dramas that people might actually watch.

So I think it's going to be a while before you get the advertisers back. I don't know if Comcast will be able to turn around that business. Hopefully they'll be able to get the value they need out of cable and get the value they need out of Universal Studios and out of the theme parks, but I don't think that the NBC network is going to be much help.

Stipp: Well, I'll be waiting to see how the jokes on "30 Rock" change about GE and see if there's any Comcast jokes coming in there.

Glaser: Exactly.

Stipp: So also in M&A, there was some news in the coffee world. Tell us about what you're seeing there.

Glaser: Yeah, Green Mountain and Peets are bidding to buy Diedrich, which makes the little canisters that you use in the single-use coffeemakers. Now, these single-use coffeemakers are pretty much a luxury item for a lot of homes.

And I think it shows that what people are doing is that instead of maybe going to Starbucks, they're trading down to these sort of luxury in-home items. They're not quite ready to bring out the Mr. Coffee yet, but it shows that maybe that's the consumer's sentiment, is that people still want to splurge on themselves, but they're looking for a good value.

Stipp: So lastly, you had some interesting connections between the Dubai incident and an index ... that originated in the past. Tell us a little bit about what you see there.

Glaser: Andrew Lawrence came up with this idea of a skyscraper index. That's when a company builds the world's tallest building, it means that economic hard times are coming or have already arrived. We saw it with the Empire State Building during the Depression. We saw it with the Petronas Towers in Malaysia and the East Asian crisis. And I think that we're seeing it again with the Burj Dubai and the Dubai financial crisis that is happening right now.

Last week they said they're going to need six months off from paying their debt payments. It's not clear that they're even going to be able to make the payments after that. Maybe if we saw that they were spending so much money on real estate projects that might not have had a great use, we might have been able to see that this debt problem was coming down the pipe.

Stipp: Well you'll be happy to know, Jeremy, that I'm working on my own index, which will be a contrarian indicator. It's called the Brother-in-Law Picks Index. A lot of activity around the Thanksgiving dinner table. The more picks, the louder the brother-in-law is. Perhaps a sign that maybe we should be pulling back out of the market a little bit, but we'll see how that turns out.

Glaser: All right. [laughs]

Stipp: We'll have some good picks for you next week, however, for Morningstar's Ideas Week. This is when we are going to be bringing you some of our fund, stock, and ETF analysts' best ideas for 2010. We'll also have some economy ideas for you and some ideas for your portfolio.

So please join us next week for Ideas Week, and we will see you then. For Morningstar, I'm Jason Stipp. Thanks for watching.