Hot Air or Tough Talk?

Jason Stipp: I'm Jason Stipp for Morningstar and welcome to the Friday Five. It's not unusual to see CEOs, politicians, and dealmakers posturing and grand-standing, and this week was no different. Here with me with five possible instances of posturing is Morningstar markets editor, Jeremy Glaser.

Jeremy, thanks for joining me.

Jeremy Glaser: You're welcome, Jason. We always have frank talk on the Friday Five.

Stipp: So, what do you have for the Friday Five this week?

Glaser: This week we saw politicians posture about tax policy. We saw Procter & Gamble have some posturing about their brands. Central bankers talked about their take on the recovery. CBS and Comcast talking up a big deal. And finally, we'll take a look at some Blackberry drama.

Stipp: Tax issue is always a point that politicians like to argue about and make points about. What did you see on that front this week?

Glaser: You're absolutely right. We hear about taxes all the time, but this week it's really turning to crescendo, where we're talking about the Bush tax cuts. They are set to expire at the end of December, and no one really knows what to do, a lot of politicians, especially on Republican sides we need to completely keep them as-is and actually enact more tax cuts.

President Obama and Tim Geithner are saying that we need to allow the tax cuts for the very rich, the top people who make over $250,000, to expire. And to some people who are everywhere in between. And it's not really clear how much of this is just posturing, what's going to happen with the tax code, but it has a lot of implications for investors beyond just income taxes. Things like dividends and capital gains being taxed at the same rate, the estate tax--a lot of other issues that are very central to people's financial life are hanging the balance.

So, I think that hopefully this posturing will turn to actual policy sooner rather than later.

Stipp: Certainly, something we'll be watching very, very closely.

This week, also in corporate news, P&G reported and they had some interesting things to say about their brands. What did you hear there?

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Glaser: The CEO of Procter & Gamble said that they are absolutely going to defend their market share wherever they can, that if they see someone like a private-label brand or another branded product come in and try to take share away from them, they're going to come in there through marketing, through product development, through whatever they have to do to keep people buying Tide as their detergent, instead of some other alternative.

And this could be posturing, this could be them just saying that as a shot across the bow towards other companies to say, hey, don't even try to get into a price war with us because we're just going to defeat you because we're so big, or it could be really serious. Based on the amount of money that they spent this quarter to do that marketing, it looks like that could be more than just bluster, and that they are really serious about defending their market share.

Stipp: We also heard this week from Ben Bernanke, and it seems like he's not willing to come out in full force to say that recovery is on track. They were sort of saying that for a while, but we're kind of getting little bit more of a mixed message from him now.

Glaser: Ben Bernanke, along with central bankers across the world, including the EU and Australia and all over the place, are certainly trying to put the best face on the economic data that's coming out right now. While certainly it shows recovery is in place, no one has seen this robust growth. And Bernanke admits that there is lots of areas in the economy that are going to need some work, some investments that banks are going to need to start making construction loans and all of these things for the economy to really get back on track.

I think it's interesting to see that they're making these policy statements and they are not being terribly pessimistic. I think one of the reasons could be is that they are running out of policy tools. From a monetary policy standpoint, rates are already completely zero. Now, these things they can do with quantitative easing and they can put more money even to the supply, they have some tools at their disposal but many fewer than they did at the beginning of the crisis.

So, part of it could be that their hands are tied and they want to kind of put the best spin on it. Part of it could be that the economy really is doing better and these are their earnest views, but certainly you have to sometimes read between the lines a little bit with these statements because they know that their words are very powerful and they want to make sure that they are sending the right message.

Stipp: CBS and Comcast also in the news this week. They were talking up a partnership. I'm wondering if this is just posturing or is this a real change in how content providers and cable channels might be working together.

Glaser: It was somewhat surprising this week to see that CBS and Comcast are getting together in a new distribution deal, which beyond just the cable properties, it's also going to extend into the online space and into the on-demand area.

Now, online is something that a lot of the television networks have been definitely wading into with things like Hulu and free streaming on their sites, but this is definitely another approach, saying, "You have to be a paid subscriber of Comcast in order to get our content," and it shows that they are still trying to find the right model that's going to work, and Comcast is showing that they're willing to be flexible and having some of their customers actually consume that content outside of the TV.

But at the same time, you have to see that some of this could just be that Comcast is trying to posture as they are trying to get their deal for the purchasing of NBC passed through federal scrutiny.

Certainly, by working very closely with the competitor of NBC, shows that they want to play ball and they were going to keep having these deals, and it could ease some of the concerns that the federal government has about the potential deal.

Stipp: Finally, Jeremy, in news this week, BlackBerry may have been posturing when they said that they had released a new iPhone Killer. But there was another thing that they were saying this week that may be posturing in a different way, maybe more nuanced, but also maybe a little bit more interesting. What did you hear there?

Glaser: Yeah, I don't think anyone is actually going to believe that the BlackBerry Torch is going to burn the iPhone. But another way in which RIM was posturing this week is when the CEO said that they are not going to give into demands of the Saudi government and the United Arab Emirates to allow those nations to take a look at the encrypted traffic and the encrypted messages that are coming through the BlackBerry.

Certainly, they are making a principled stand here, but it's also one that could be potentially economically detrimental to them, because these are markets that they would like to expand in. So, the CEO also expressed hope that they would be able to solve this some way and be able to keep selling their devices there. It's certainly something that we're certainly going to keep an eye on. And I think is the sort of thing that could be a bigger issue for a lot of companies going forward.

Stipp: Well, Jeremy, I always enjoy your posture-free commentary.

Glaser: You are very welcome, Jason.

Jason Stipp: For Morningstar, I'm Jason Stipp. Thanks for watching.