China Renews Google License

Shares of Google, Inc. rose this week after the Chinese government renewed Google's Internet Content Provider (ICP) license this week that permits the company to continue to provide web search products to users in China. Google responded that it has done its best to increase access to information while abiding by Chinese law. "This has not always been an easy balance to strike, especially since our January announcement that we were no longer willing to censor results on Google.cn," Google stated in its press release.

Google had been automatically redirecting everyone using Google.cn (Google's search engine for mainland Chinese users) to Google.com.hk, its Hong Kong search engine. Google said that the redirect worked well for Chinese users but the Chinese government found the redirect unacceptable. The Chinese government said that if Google continued redirecting users, its ICP license would not be renewed. Without an ICP license, Google would be unable to operate a commercial website like Google.cn in China.

The idea of Google going dark in China was a prospect dreaded by many of Google's Chinese users and one that forced Google to look for an alternative way to provide service to China. Instead of automatically redirecting all Chinese users, Google started taking a small percentage of users to a landing page on Google.cn that links to Google.com.hk where users could conduct web searches provided locally without filtering.

Google submitted its ICP license renewal application to the Chinese government based on this approach. Now that the license has been approved, Google said that it will end the redirect entirely, taking all its Chinese users to Google's new landing page. Google said that it believes this approach is consistent with its commitment not to self-censor and complies with local law.

Google, Inc. (GOOG) ended the week down at $467.46.

Drilling, BP and the Gulf Oil Spill

British Petroleum (BP) announced plans this week to remove a well cap that has been used to stem the flow of oil into the Gulf of Mexico. The cap, which is to be removed Saturday, will be replaced with a new one, which according to BP, will be a more efficient cover.

Admiral Thad Allen, the government's liaison for clean-up efforts, said that the goal of the new cap is to catch and move the majority of the spilling oil out of the Gulf and onto four platforms. He also noted that once the new cap is installed, they will be able to make a better assessment of how much oil has already leaked into the Gulf.

BP issued an update on July 9 concerning its Gulf oil spill response efforts. The oil company said that on July 8, approximately 7,940 barrels of oil were collected and approximately 4,150 barrels of oil were burned. Since BP implemented the oil cap and other recovery systems, it says that it has recovered approximately 731,000 barrels of oil.

Earlier this week, the 5th Circuit Court of Appeals rejected the federal government's attempt to continue a moratorium on offshore oil drilling. The moratorium, which was established following the Gulf oil spill, was lifted by a district judge on June 22.

British Petroleum (BP PLC) ended the week up at $34.05.

Madison Square Garden Down on LeBron Choice

Shares of Madison Square Garden fell this week following basketball star LeBron James' much-awaited decision to leave the Cleveland Cavaliers and join the Miami Heat. Following LeBron's recent visit to the Big Apple, where he reportedly looked at a New York Brownstone residence, investors speculated that he would join the Madison Square Garden-owned New York Knicks.

Many commentators have written about the economic impact of LeBron's decision. Before LeBron joined the Cleveland Cavaliers, seven years ago, there were thousands of empty seats for most Cavalier games and very little night life in downtown Cleveland. Cleveland residents credit LeBron, in part, for revitalizing the city center by bringing spectators downtown generating millions of dollars in revenue for local restaurants and other businesses.

LeBron's superstar status is credited with selling out every game in Cleveland's 20,000 seat arena last season. Cleveland vendors reported a surge in LeBron jersey sales while restaurants and bars profited from increased downtown traffic. One estimate is that Cleveland could lose as much as $20 million in revenue if game attendance returns to previous levels once LeBron leaves town.

What are the economic benefits for Miami? Record sales of LeBron's new Miami Heat jersey (already a hotly sought item online) are anticipated in South Florida. There is also now a waiting list for Heat season tickets. Corporate sponsors say that new sponsorship sales for Heat games are a given with the anticipation of top TV ratings.

Madison Square Garden (MSG) ended the week down at $19.35.

The Dow started the week at 9,686 and ended at 10,198. The S&P 500 started the week at 1,023 and ended at 1,078. The NASDAQ started the week at 2,092 and finished at 2,196.

Treasuries Fall on Jobless Claims

A better-than-expected jobless claims report pushed Treasury prices lower this week. The Labor Department reported 454,000 initial unemployment benefit claims for the week of July 3. Claims fell by 21,000 from last week's revised figure of 475,000.

The four-week moving average for filed claims, which is often cited as the more accurate assessment of where unemployment benefits currently stand, declined to 466,000 this week. This marked a decrease of 1,250 from the previous week's revised average of 467,250.

Economists pointed to other data released this week that suggests the economy is improving. The Thompson Reuters Sales Index rose by 3.1% for the month of June. Retailers reported increased shopping over the Memorial Day weekend as well as the recent Fourth of July holiday weekend. Economists caution that while consumers are still restraining their spending, the fact that they are spending bodes well for the economic recovery.

Also impacting the markets this week, crude oil futures rose higher, by nearly 2%, on Thursday. The Energy Information Administration's reported a 5 million barrel decline in U.S. crude oil inventories. Economists say that the decrease in crude supply is driving up oil prices.

The 10-year Treasury note yield began at 2.98% and ended at 3.05%. The 30-year Treasury note yield began at 3.94% and finished at 4.03%.

Moderate Rise in Fifteen-Year Mortgage Rates

Freddie Mac reported fifteen-year mortgage rates rising moderately this week. The 15-year FRM averaged 4.07%, up from last week when it averaged 4.04%. One year ago at this time, the 15-year FRM averaged 4.69%.

The 30-year fixed-rate mortgage (FRM) averaged 4.57%, down from last week when it averaged 4.58%. Last year at this time, the 30-year FRM averaged 5.20%. This rate is yet another all-time low in Freddie Mac's 39-year survey.

"With mortgage rates falling to historic lows, refinance activity has been strong over the past three months," said Frank Nothaft, Freddie Mac Vice President and Chief Economist. The effective mortgage rate of all loans outstanding was just below 6% in the first quarter of 2010 according to the Bureau of Economic Analysis.

The Mortgage Bankers Association also reports two out of three mortgage applications, on average, were for refinancing since the start of the second quarter of 2010. Nothaft also noted that household balance sheets have improved, which increases home owner purchasing power.

The money market fund finished this week at 0.75%. The 1-year CD finished at 1.14%.

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