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For Immediate Release
Chicago, IL – April 9, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include McDonald’s Corp (MCD - Analyst Report), Kroger Co. (KR - Analyst Report), Safeway Inc. (SWY - Analyst Report), Tyson Food Inc. (TSN - Analyst Report) and JPMorgan Chase & Co. (JPM - Analyst Report).
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Here are highlights from Thursday’s Analyst Blog:
Pink Slime Controversy Gains ‘Ground’
The ‘pink slime activists,' protesting against the usage of 'pink slime' in ground beef, has scored their first victory as the U.S. Department of Agriculture (USDA) reported that major beef processors have applied for labeling that would indicate the presence of pink slime in their products. The USDA is planning to approve these labels after examining their accuracy.
Pink slime, created from low-quality beef trimmings, is an industrial byproduct and is usually treated with ammonia gas to qualify it for food health standards.
Critics argue that several cheap ground beef and frozen-marketed hamburger patties contain pink slime as an additive. Although the food watchdogs certify that they meet the food standards, some critics argue that the addition of pink slime is not disclosed on the labels.
Many food stores like McDonald’s Corp (MCD - Analyst Report), Kroger Co. (KR - Analyst Report), Safeway Inc. (SWY - Analyst Report) and Food Lion stopped purchasing ground beef with the controversial meat filler.
Beef processors believe that the inclusion of the new labels in their products will restore the level of confidence of the consumers. They also noticed that since the pink slime stir began, demand for beef without the additive had increased.
However, the trade group for farmers, National Cattlemen's Beef Association, believes that a label indicating the presence of pink slime is unnecessary as the finely textured beef product is also pure beef.
The confusion regarding the effect of pink slime has reduced the consumption of ground meat to a considerable extent. Tyson Food Inc.'s (TSN - Analyst Report) management forecasted that there will be a 2% to 3% reduction in supply, which in turn will drive up costs for consumers.
JPMorgan Fined for Lehman Collapse
The ghost of the financial crisis, Lehman Brothers Inc., has yet again returned to haunt JPMorgan Chase & Co. (JPM - Analyst Report). JPMorgan has been penalized for over-extending credit to Lehman for almost two years (November 2006-September 2008). Consequently, JPMorgan will be paying a fine of $20 million to the U.S. Commodity Futures Trading Commission (CFTC).
As the main clearing bank of Lehman, JPMorgan had two accounts that contained the funds of Lehman’s customers. CFTC accused JPMorgan of considering one of the account’s funds as the firm’s own belonging while calculating the amount of credit that can be extended to Lehman on the daily basis. This led to a higher loan amount, which has been given to Lehman for its own trades, than it was eligible for.
As per the law, if any financial institution considers the customers’ funds as funds of any other organization or if it provides loan to a firm by taking in those funds in calculation, it will be fined/penalized.
JPMorgan has been also indicted for not releasing customers’ money for nearly two weeks after Lehman filed for bankruptcy in late 2008, thereby preventing lawful transfer of money to the customers at the time of the financial crisis. Later, JPMorgan released the amount, only on the insistence of CTFC. At any given point of time Lehman held $250 million to $1 billion of customer money with JPMorgan.
However, JPMorgan neither admitted nor denied the unlawful activity. Further, as a part of the settlement deal, the company will be taking steps to ensure proper handling of the customers’ money. On being asked, the company will release the funds to the customers.
This is the third time that JPMorgan has been indicted on similar charges. In 2010, UK’s Financial Services Authority had penalized JPMorgan £33.32 million for failing to keep aside $23 billion of client money.
Similarly in 2009, JPMorgan had to pay $300,000 to settle CTFC’s charges. CTFC had accused the company of creating a shortfall in customer funds of about $750 million. Though the deficit was cleared the very next day, the CTFC fined the company for not informing the regulators about this.
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