Today's Business: Google (Nasdaq: GOOG) Stands Up to China

Kudos to Google for Standing Up for Human Rights and Freedom of Speech, While Taking on China at Risk of Real Economic Loss

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Today's Business: Google Stands Up to China

Google (Nasdaq: GOOG) put principle ahead of profits, as the Internet search giant said it would pull out of China if it could not operate in the country without censorship. Google announced its "New Approach to China," yesterday after the market close. Google noted a significant cyber attack emanating from China, and clearly from a well-organized and technologically savvy source (i.e. Chinese intelligence). After having its own intellectual property stolen, and witnessing the tools used by its global clients beyond China strategically targeted, Google understood that its global integrity was more important than its business in China, albeit huge.

Google's executives also had their collective conscience tested, as they witnessed Chinese attempts to gain access to the emails of human rights activists. Kudos to Google, for formally announcing they would shut down Google.cn if they could no longer operate under the freedom of speech laws that govern their work in almost all other civilized nations. The cost of exiting China, if need be, is not negligible by any means, and so we salute this admirable action by Google, and are proud of them as well. Should the company quit China, Google subjects an estimated $600 million in annual revenue from China's 338 million Internet users. GOOG's shares were down 2.3% in the premarket, while the shares of rival Baidu (Nasdaq: BIDU) rose 16%.

Asia Pays Price

Asian markets paid a price today in trading following yesterday's significant slip in US and European shares. China may have also been impacted by Google's bold move. China's CSI 300 Index fell 3.2%, while the MSCI Asia Apex 50 Index fell 2.2%. Japan's NIKKEI 225 slipped 1.32%, while Hong Kong's Hang Seng fell 2.6%. However, India's BSE Sensex 30 moved 0.5% higher in defiance.

Mortgage Activity

With contracted rates on fixed rate mortgages coming down a bit, mortgage activity improved in the week ended January 8. Contracted rates on 15-year and 30-year fixed rate mortgages dropped to 4.45% (from 4.62%) and 5.13% (5.18%), respectively. As a result, the Mortgage Bankers Association's Market Composite Index increased 14.3% on a 21.8% gain in the Refinance Index. The Purchase Index inched up by 0.8%, as it is less sensitive to short-term fluctuations in rates.

Wall Street Probed

The Financial Crisis Commission is focusing a heated spotlight on the leaders of Goldman Sachs (NYSE: GS), J.P. Morgan Chase (NYSE: JPM), Bank of America (NYSE: BAC) and Morgan Stanley (NYSE: MS) this morning, as they give testimony on the financial sector meltdown. Also today, the American SEC takes up the subjects of high-frequency trading, "dark pools," and risk management rules. Meanwhile, Lehman Brothers will be in bankruptcy court seeking resolution on $800 billion in claims.

Oil Inventory

The EIA will make its regular report on oil inventory at 10:30 AM. In the week ended January 1, crude oil inventory grew by 1.3 million barrels and remained above the upper limit of the average range for this time of year. Gasoline stocks rose by 3.7 million barrels, as the end of holiday shopping eased demand. Distillate Fuel inventories still fell by 0.3 million barrels, driven by weather and heating demands for heating oil, diesel and other distillates.

Treasury Budget

The US Treasury Budget will be reported for December at 2:00 PM ET. November showed a treasury deficit of $120.3 billion, marking the 14th straight monthly deficit. In recent years, December has offered a monthly surplus, but in fiscal '09, it produced a deficit. Economists are looking for a deficit of $92.0 billion this year, as stimulus efforts continue to outweigh slim receipts.

Beige Book and Fed Speak

Later in the afternoon, the Fed will release its latest Beige Book regional economic survey. Chicago Fed President Charles Evans is scheduled to speak on the economy and monetary policy at a luncheon gathering.

Corporate News Drivers

Monsanto (NYSE: MON) is slated to go over its R&D pipeline with investors and analysts in Boston today. Domino's Pizza (NYSE: DPZ) has its investor's day scheduled, after just having launched a revitalization of product and image marketing campaign. The day's earnings schedule includes only a report from CLARCOR (NYSE: CLC).

CORRECTION: The European Central Bank (ECB) is scheduled to make its latest policy decision on Thursday (not Wednesday), as previously published here.

Editor's Note: This article should also interest those interested in the shares of Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), PNC Financial (NYSE: PNC), Mosaic (NYSE: MOS), Papa John's (Nasdaq: PZZA), Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), Occidental Petroleum (NYSE: OXY), ConocoPhillips (NYSE: COP), Schlumberger (NYSE: SLB).


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