Solid economic news puts tapering back on the agenda

Friday's surprisingly robust jobs report has triggered fresh debate about dialing back the Federal Reserve's $85 billion-per-month quantitative easing program.

The report showed that the U.S. economy added 204,000 jobs in October, 70% above the consensus estimates of 120,000 new jobs. It also included upward revisions for the jobs reports from both August and September.

The positive data followed a Thursday report showing that the economy was growing at 2.8% clip, or about 40% above what analysts were forecasting.

Meanwhile, the unemployment rate on Friday was adjusted slightly higher to 7.3% from 7.2%, an increase that market analysts see as an anomaly related to the recent government shutdown.

“I think the Fed can take some confidence from these reports and really put tapering back on the table,” said Dan Heckman, fixed-income strategist at U.S. Bank Wealth Management.

“I wouldn't be surprised to see a taper announcement from the Fed this year and with tapering starting in January,” he added. “There are good reasons to go ahead with tapering now, and it is certainly going to be a topic that gets moved to the front burner and will be more on the minds of investors.”

(But Fed’s Lockhart says Fed can’t rule out QE tapering next month.)

As if on cue, the bond market took the jobs data and treated it as tapering announcement, driving the yield on both the 10-year and 30-year Treasury bonds up about 14 basis points in early trading. Meanwhile, stocks rallied, with the Dow Jones Industrial Average climbing 95 points, or about 0.6%, to 15,688.56 by afternoon. The S&P 500 index added nearly 1%.

“The market is saying we probably should have tapered in September, and that's why we're getting the sell-off in Treasuries now,” said Dan Toboja, vice president of fixed income at Ziegler Capital. “I think this latest data definitely puts tapering back on the table. Right now, the market is telling you it's ready for tapering and it's giving you an excuse to do it now.”

One of the major wrinkles with regard to tapering is the impact of the head fake that Fed Chairman Ben S. Bernanke threw the financial markets in September by not beginning to taper after implying in May that such a move would be imminent.

“This time around, I'm not sure you'll see the same kind of buildup you saw in September when the markets thought there would be some tapering,” said Cam Albright, director of asset allocation at Wilmington Trust Investment Ad! visors.

Mr. Albright, who believe there now is a 50% chance of a tapering announcement this year, said any Fed action will still be heavily data-dependent and will be driven especially by the next jobs report, which comes about 10 days before the December Fed meeting.

The other major wrinkle that could be stalling tapering activity is the fact that Mr. Bernanke is expected to pass the Fed chairmanship to Janet Yellen on Feb. 1.

That reality has sparked a new level of handicapping around the unprecedented five-year quantitative easing program, which has already swelled the Fed's balance sheet to beyond $3 trillion.

“If Bernanke were going to remain, tapering would certainly be back on the table now, but it all has to do with the transition of power at the Fed, and that's one of the reasons they didn't taper in September,” said Sean Clark, chief investment officer at Clark Capital Management Group.

“Janet Yellen's stamp will be to begin tapering at her will,” he added. “And there's a potential for her to make Bernanke look hawkish by comparison.”

And then there are those like Dan Veru, chief investment officer of Palisade Capital Management, who believes the Fed's motivation for tapering has gone well beyond the stated dual mandate of managing inflation and employment.

“I don't want to make too much out of two discreet pieces of specific data, but 200,000 is not enough to force the Fed to start tapering,” he said, referring to the number of jobs added in October. “I think it's wrong to assume that the liquidity is going away, because this decision to taper is also subject to political winds and there's another big budget debate coming in January.”

With tapering essentially off the table, Mr. Veru thinks the stock market can gain add another 3% to 5% between now and the end of the year.

The backburner theory is also supported by Paul Schatz, president of Heritage Capital LLC.

“Before the jobs report we were hearing consen! sus estim! ates that tapering would possibly start in March, but it could be as far away as June, but now suddenly people are saying tapering is back on the table,” he said. “I just don't believe one jobs report changes the Fed's plan.”

Mr. Schatz, who sees the stock market gaining at least another 2.5% by January, doesn't believe the economy is even strong enough to absorb any reduction on the quantitative easing program.

“I don't believe the market or the economy can stand on its own two feet year, so as long as there's no inflation I think they should increase quantitative easing,” he said. “In our economy right now, banks, housing, and everything is predicated on historically low rates, and if rates begin to spike imagine what that does. The fed cannot afford that ah-ha moment.”

Who Are the World's 2nd Best CEOs?

Once you get the hang of it, it's pretty easy to dissect balance sheets, income, and cash flow statements. This is the first step in getting your feet wet in the investment world.

But it doesn't stop there. If we were to base investing decisions solely on what we read in these statements, that would be akin to picking a significant other based solely on their Facebook profile -- to many, it just doesn't make sense to avoid real-life interaction.

Investigating these "soft" aspects of a company is important for investors. And although we can't capture all of the intangibles of a company in one article, Glassdoor.com -- a website that collects employee sentiment for companies across the world -- recently came out with a list that could help: the Top CEOs of 2013.

Over the past few days, I've covered CEOs 25 through 3. Today, I'm going to introduce you to the company with the second-highest-rated CEO, give you some background on the company, and at the end, I'll offer access to a special free report on who is going to win the war between the five biggest tech stocks.

SAP (NYSE: SAP  )
You may have seen commercials for this giant German company before, but maybe you still don't understand what it does. In the most basic sense, SAP designs software that allows all the groups that are involved with putting a product or service out -- supply chain managers, sub-contractors, marketers, etc. -- to communicate on a common platform.

In today's global economy, having a set software across a whole company is important, as it makes geographically and intellectually disparate parts of a company communicate effectively with one another.

Without a doubt, SAP is not the only company in the world that provides this type of service. It can count other behemoths like Microsoft (NASDAQ: MSFT  ) and Oracle (NYSE: ORCL  ) among its competitors, too.

A key differentiator, however, is that a company like Microsoft has a number of different irons in different fires -- like search and even gaming. And Oracle also focuses heavily on software outside of just the niche area of enterprise resource planning, or ERP. This means that SAP has the advantage of being slightly more focused on its goal of providing the best ERP experience possible.

This helps explain why SAP has a 22% market share in ERP, followed by Oracle at 15%, and Microsoft Dynamics at 10%. 

Co-leaders to guide the way
Unlike all of the other companies on this list, SAP is led by not one, but two CEOs. Bill McDermott has held his title as CEO since joining Jim Hagemann Snabe in February 2010. McDermott joined the company in 2002 as the director of the company's Americas and Asia-Pacific regions. 

Snabe was appointed at the same time as McDermott, but has been with the company since 1990, working his way up from sales and consulting roles all the way to the executive suite.

Together, they have put together a company that has increased revenue by 11.3% and earnings by 9.1% per year.

SAP Revenue TTM data by YCharts.

While that might be impressive, its worth noting that this year, SAP's employees not only gave their co-CEOs a 99% approval rating, but the company was also rated one of the top 50 places to work in 2013.

One of the reasons these two may have received such rave reviews is because of the benefits and flexibility the company offers its employees. Being a global company, neither CEO is interested in micromanaging, instead allowing small and diverse teams to function in different parts of the world to meet local needs.

As McDermott told Leaders magazine recently: "While the workforce may be over 60,000, they're in small teams located all over the world. For example, we're innovating in China for China. ... We have innovation labs in all of the BRIC countries." 

While recognizing quality leadership is important, it's worth noting that since 2013 began, the approval rating for these two has slipped somewhat, from 99% to 95% -- which would have given them a more modest ranking somewhere between fourth and and ninth.

Either way, you can't make an investment decision based on one ranking alone. This is just a starting place to explore if SAP is right for your portfolio.

Who will win this technology war?
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" , and if SAP is one of those stocks, in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Hewlett-Packard to Split in Two, Cut 5,000 More Jobs

Justin Sullivan/Getty Images Hewlett-Packard (HPQ) said it would split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services operations, and eliminate another 5,000 jobs as part of its turnaround plan. HP said its shareholders would own a stake in both businesses through a tax-free transaction next year. Each business contributes about half of HP's revenue and profit. Shares of the 75-year-old company, which has struggled to adapt to the new era of mobile and online computing, were up 4.4 percent at $36.78 in late morning trading on Monday. Chief Executive Officer Meg Whitman told Reuters the newly created HP Inc. would mostly stick to its knitting -- PCs and printers -- for now, while exploring related markets such as 3D printing. Richard Drew/APHewlett-Packard CEO Meg Whitman The company has no plans to venture into the hotly contested consumer mobile devices market, where it stumbled years ago. "There's still lots of opportunities in other adjacencies, where we don't chase the market leaders," said Whitman, who will be CEO of HP Enterprise, the business that will sell computer servers and networking gear and data storage to businesses. Whitman said HP's balance sheet had improved markedly over the past few years, allowing the company to come to the decision to split up from a position of strength. "This would not have been possible three years ago," she said, referring to a proposal to spin off PCs in 2011. Some analysts expressed skepticism about the latest move. Barclays analysts noted that the sudden announcement in 2011 was disruptive to HP's sales, its sales force and demand. "If the [latest] decision by HP isn't well communicated or is not well executed, the negative share shifts could be material," they said in a note. Analysts at Bernstein Research also warned of "material negative synergies" and one-time costs associated with the spinoff, largely in purchasing but also in distribution. The separation, they said, was fueled by weakness, not strength. A spinoff of the PC business was last proposed in 2011 by then-CEO Leo Apotheker. HP later ditched the plan -- and Apotheker, replacing him with Whitman. HP said it planned to cut 5,000 more jobs as part of its multiyear restructuring, raising the total under Whitman to 55,000. The company currently has more than 300,000 employees. The separation will result in a fundamental reshaping of one of technology's most important pioneers, which is on track to generate $112 billion in revenue in the fiscal year this month. While there were skeptics, many investors and analysts had called for a break-up of HP or a sale of the PC business so that HP could focus on the more profitable side of its operations. "Shareholders will now be able to invest in the respective asset groups without the fear of cross-subsidies and inefficiencies that invariably plague large business conglomerates," Ralph Whitworth, former HP chairman and founder of Relational Investors, said in a statement. Relational owns a 1.49 percent stake in HP. HP is the latest in a line of companies to spin off operations in an attempt to become more agile and capitalize on faster-growing businesses. Online auction company eBay (EBAY), which was formerly run by Whitman, said last week it would spin off electronic payment service PayPal. "We like the spin and believe it could create additional value over time," UBS (UBS) analyst Steven Milunovich, wrote. "In our view, focus is more important than synergies, and it is hard to be good at both consumer and enterprise computing." HP's printing and PC business will be led by Dion Weisler, currently an executive in that division. Whitman will be chairman of HP Inc.

Here's 'The Situation': Jersey Shore's Mike Sorrentino Indicted On Tax Fraud Charges

Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I had a LL.M Taxation. I needed only to don my cape…. taxgirl® was born. Today, I live and work in Philadelphia, PA, one of the best cities in the world (I can't even complain about the sports teams these days). I landed in the City of Brotherly Love by way of Temple University School of Law. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. I even took the lead on a successful audit. At audit, opposing counsel read my report, looked at his file and said, "Gentlemen, she's exactly right." I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax.

Contact Kelly Phillips Erb

The author is a Forbes contributor. The opinions expressed are those of the writer.

Biggest Retirement Income Gap Seen for Oldest Pre-Retirees

Older pre-retirees are furthest from being retirement-ready, according to a recent analysis  by BlackRock and the Employee Benefit Research Institute.

The younger the retiree, though, the better it looks.

According to the study, 55-year-olds with median income and retirement savings are on track to replace 69% of their pre-retirement income. Based on the idea that retirees will need to replace about 80% of their income in retirement in order to maintain their standard of living, these 55-year-old median workers are falling 14% short.

For older pre-retirees, the gap gets wider.

The study found that 64-year-olds with median income and retirement savings will be able to replace only about 59% of their income, less than 60-year-olds who have the potential to replace about 64%.

“U.S. workers closest to retirement, and with the least amount of time left to bulk up their savings, are the ones who have the most work to do,” wrote Chip Castille, head of BlackRock’s U.S. Retirement Group, on BlackRock's blog.

BlackRock focused on people in their last decade before the traditional retirement age of 65 that have the two primary sources of retirement income, Social Security and retirement savings, usually 401(k) plans and individual retirement accounts.

“The 26% gap that the median 64-year-old faces to replace 80% of pre-retirement income is more daunting,” wrote Castille. “And for workers who expect to make up at least some of the difference by staying on the job past age 65, it’s important to note that EBRI’s 2014 Retirement Confidence Survey has found that 49% of retirees left their jobs earlier than they had planned.”

Castille added one explanation for the larger gap for older pre-retirees is “workers in their 60s are far more likely to receive some sort of traditional pension to supplement their retirement.”

To assess the retirement readiness of pre-retirees, BlackRock used its CoRI Retirement Indexes and incorporated data on U.S. workers’ median income and retirement savings provided by the Employee Benefit Research Institute.

To estimate the Social Security retirement benefits at the “full retirement age,” BlackRock collected the median retirement savings balances of people the same ages who have 401(k) accounts and IRAs in EBRI’s database and used the BlackRock CoRIRetirement Indexes to estimate the retirement income that those savings could provide.

Launched last year, the CoRI Retirement Index series was developed to help investors age 55 and older plan for retirement by tracking the estimated cost of $1 of future, annual inflation-adjusted lifetime income beginning at age 65.

The analysis also found that the cost of future income for investors ages 55, 60 and 64 has risen since BlackRock began tracking the cost of future retirement income a year ago.

“For someone age 55, for example, every $1 of lifetime retirement income was estimated to cost $14.09 as of June 30 – a 7.15% increase from what that same income would have cost a 55-year-old a year ago,” the study said.

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Related on ThinkAdvisor:

Apple, Inc.: We are Working on New Materials, New Areas

"Later this year, we've got the best product pipeline that I've seen in my 25 years at Apple," Apple's (NASDAQ: AAPL  ) VP of Internet, software, and services said at the Code Conference last month.

"Wait," some may protest, "Twenty five years? That includes the iMac, iPod, iPhone, and iPad -- the products that define Apple's greatest years under the iconic Steve Jobs. How can Eddy Cue say that?"

For Apple to make such a bold statement, the company should be readying an entirely new product for a 2014 launch. Even more, the new product -- or products -- should be revolutionary. That's about the only way the company could live up to such a statement.

Such a task won't be easy. But Apple seems more willing than ever to bend the possibilities of tomorrow -- even if it requires entirely new materials and new areas.

On new materials
Enter Apple's senior vice president of design, Jonathan Ive, arguably the company's most important executive after CEO Tim Cook. In a full transcript of an interview with Ive (made available yesterday) used for an in-depth profile of Cook by The New York Times that was published last weekend, Ive said Apple is making big moves into new areas and new materials.

I've worked for the last 15 or 20 years on the most challenging, creative parts of what we do. I would love to talk about future stuff -- they're materials we haven't worked in before. I've been working on this stuff for a few years now. Tim is fundamentally involved in pushing into these new areas and into these materials.

One new material that Apple is rumored to be making a big bet on is sapphire crystal. In fact, one analyst says that his supply checks indicate Apple could be prepping to deliver as many as 200 million annual devices with sapphire displays -- a level that would exceed current annualized iPhone sales by about 40 million.

Further, as MacRumors' Juli Clover explains, Apple may also be experimenting with Liquidmetal alloys and grapheme (a new manufacturing material). 

On new areas
And contrary to the critics' suggestion that Apple's innovation is faltering, Apple executives seem to think otherwise. Specifically, Ive says Cook has "not neglected" Apple's key tenet to always innovate. But patience for innovation is difficult -- and it always has been, Ive notes. On that note, Ive says he doesn't think anything has changed, "And that includes the clamor for some exciting new thing," said The New York Times writers Matt Richtel and Brian X Chen.

What is the "exciting new thing" Richtel and Chen are referring to? Probably the rumored iWatch. The ever-active Apple rumor mill is expecting the company to launch the device this fall, possibly shortly following the iPhone launch.

Apple investors should rest easy. Apple hasn't given investors any reasons yet to suggest it has lost its spirit of innovation, and it sounds like we'll soon get to see whether Apple can successfully push the boundaries in both new areas and new materials once again. Sitting and waiting is probably the best action Apple investors can take today.

A rare investment opportunity?
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Big Tobacco Might Be Getting a Bit Smaller

It appears the buyout of Lorillard (NYSE: LO  ) by Reynolds American (NYSE: RAI  ) is still one of the hottest topics in the M&A market. Rumors have surfaced that the two are now in "advanced" talks of a merger. Speculation first rose a couple months ago, and after the latest news, shares of both comapnies have spiked.

Specifically, shares of Lorillard rose nearly 10% on the news. With the help of the buyout speculation, Lorillard and Reynolds American have seen their respective shares move upwards by 20% or more year to date. Meanwhile, their U.S. peer Altria (NYSE: MO  ) is up only 5%.

What the deal means
A Reynolds American-Lorillard merger gets somewhat complicated, given British American Tobacco has a 42% stake in Reynolds American. British American Tobacco could get involved by helping Reynolds American finance the purchase.

The combined market capitalization of Reynolds American and Lorillard is still only $52 billion, and well below Altria's $80 billion market cap. In order to buy Lorillard, Reynolds American would have to dilute British American Tobacco's ownership.

The deal would also require some divesting of assets and brands in order to get regulatory approval. Even a combined Reynolds American-Lorillard would only have 42% of the U.S. tobacco market share. This compares poorly to the leader, Altria, which owns over 50% of the market.

Wells Fargo is one of the biggest supporters of the deal. The bank believes the deal has a 90% chance of being completed. It also believes that Lorillard could sell for as much as $80 a share. That's a 30% premium from where it currently trades.

The bright side of a merger
The deal would give Reynolds American a stronghold in both e-cigarettes and menthol cigarettes, which could be both good and bad for Reynolds American. On the negative side, there has been previous speculation that the FDA could ban menthol cigarettes. Over 85% of Lorillard's sales are of its menthol brand, Newport. On the positive side, the deal would put Reynolds American as a leader in one of the fastest growing tobacco markets.

Lorillard owns the leading e-cigarette maker blu eCigs, which has 40% of the market. Reynolds American is launching its own e-cigarette brand, VUSE, in the second half of this year. This kind of presence in the e-cigarette market is another key positive factor considering recent research in Britain, which suggests that e-cigarette users have a 60% higher success rate when quitting smoking than those using another method.

Where does that leave Altria?
Being the largest cigarette manufacturer gives Altria pricing power, but it is behind when it comes to the e-cigarette market. Altria plans to launch MarkTen, its own brand of e-cigarettes, during the second quarter. To give it an immediate presence in the e-cigarette market, Altria recently bought up e-cigarette maker Green Smoke. Philip Morris International will also be selling Altria's e-cigarettes outside the U.S. Meanwhile, Altria can sell Philip Morris' heated tobacco products.

No discussion of the tobacco industry is complete without mentioning the dividend yields. These stocks offer some of the highest dividends in the market. The all trade with similar P/E ratios, between 18 and 21, but the dividend yields vary. Lorillard pays a 3.9% dividend yield, while the other two are a bit higher. Reynolds American pays a 4.5% dividend yield and Altria's is 4.7%.

Bottom line
Consolidation in an industry is a positive. It can lead to better pricing and higher margins. The top three U.S. tobacco companies offer very attractive dividends. A Reynolds American-Lorillard merger would put the combined company in a better position to compete with Altria. Investors looking for a strong dividend paying stock, as well as exposure to the tobacco industry, should take a closer look at Reynolds American.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Snap-on Incorporated to Acquire Pro-Cut International for $45 Million (SNA)

Snap-on Incorporated (SNA) announced on Friday that it has agreed to acquire all of the assets of Pro-Cut International for $45 million.

Snap-on will acquire Pro-Cut for $45 million in cash. Pro-Cut is a manufacturer and designed of on-car brake equipment. The company’s sales were approximately $25 million in 2013.

Snap-On’s CEO and Chairman Nick Pinchuk commented: “Pro-Cut’s advanced brake servicing product line enhances and increases Snap-on’s offering of productivity solutions for vehicle repair facilities, including independent shops, national service chains and OEM dealerships.”

“We believe Pro-Cut will be an important addition to our Repair Systems & Information Group and will help us move further along our coherent growth runway of expanding with repair shop owners and managers. We look forward to welcoming Pro-Cut associates to the Snap-on family,” Pinchuk added.

SNA Dividend Snapshot

As of Market Close on May 29, 2014

Click here to see the complete history of SNA dividends.

Snap-on shares were mostly flat during pre-market trading Friday. The stock is up 6.83% YTD.

Jim Cramer's 'Mad Money' Recap: Out With a Bang

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

NEW YORK (TheStreet) -- The first quarter went out with a bang, Jim Cramer said on Mad Money Monday. But even as many investors said "good riddance" to a topsy-turvy quarter, the buzz on Wall Street on Monday was Michael Lewis' new book Flash Boys: A Wall Street Revolt.

Cramer said the only thing shocking about Lewis' new book is that people find it shocking at all. Cramer has been a long-time opponent of high-frequency trading, warning investors of how this type of trading hurts not only investors but the markets themselves.

Yet, while the practice of front-running is illegal, high-frequency trading has been overlooked and even embraced by the SEC and the major exchanges. "It's not stealing if it's not illegal," Cramer said as he wished Lewis more luck than he in raising awareness of the issue. High-frequency trading may only shave a penny or two from your trades, Cramer continued, but given the average market volume, that adds up to $21 million a day skimmed from the pockets of regular investors. That's why Cramer said he advocates investing for the long term. In the short term, you're sure to lose, he continued, but sticking with solid, multi-year trends will be a winner every time. Sour on Kandi No matter how great an opportunity may seem, there's only so much risk investors should be willing to take, Cramer told viewers, as he followed up on Kandi Technologies (KNDI), a stock he panned last week. Cramer explained that Kandi is a Chinese company that primarily manufactures motorcycles and go-carts, but has also introduced the Coco, a small, all-electric vehicle. The Coco news was enough to propel Kandi shares up 300% over the past 12 months as investors fashioned the company to be the Tesla Motors (TSLA) of China. But Cramer warned that, for the moment, Kandi is simply a go-cart company, one with no analyst coverage and little oversight by the Chinese government. That fact was driven home when the company received a formal investigation letter from the SEC back in November, yet chose not to disclose it in the company's quarterly earnings. Kandi buried the investigation in the 16-page "risk factors" section of its annual report. Maybe someday Kandi will be the way to play electric cars in China, Cramer concluded, but for now this stock is just far too risky. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

Stock quotes in this article: KNDI, TSLA 

Later, Waiter: A Tablet Revolution Will Displace Scads of Servers - Soon

AP/Jae C. Hong For all the talk about drones replacing parcel carriers or self-driving cars disrupting the taxi industry, there's a bigger tech revolution happening in the restaurant industry right now that may displace workers far sooner than anything futurists foresee in those other industries. The arrival of tablets and smartphone apps that detail menu items, take orders, and let you settle up your tab at the en of the meal will be a big theme among casual dining chains and even a few independent foodie haunts this year. Brinker International's (EAT) Chili's, DineEquity's (DIN) Applebee's, and a handful of San Francisco fine dining establishments are leading the push to add the technology, which will make waiters and waitresses less necessary. None of the chains have said that these tech initiatives will lead them to reduce waitstaff headcount -- but it doesn't take a lot of foresight to connect the dots. If folks are using table-side tablets to place orders and ask for drink refills, or firing up a smartphone app to pay at the end of a meal, that naturally translates into fewer front-of-house employees needed to keep an eatery going. Order Up In fact, some industry leaders outright deny that mobile tech will displace staff. "This really isn't a labor play," DineEquity CEO Julia Stewart said on CNBC late last year, explaining Applebee's move to deploy 100,000 tablets this year -- one at every table. "It's not about saving labor. This is really about creating an opportunity to talk to our guest, have an interactive conversation with our guest, and give our guest a lot more opportunities." At first, a waitstaff will be instrumental in assisting customers as they use the tablets to place orders or pay their bills. There will also be patrons who are apprehensive about embracing the technology, and Applebee's will still have waiters taking orders the old-fashioned way for people who prefer talking to a person. Chili's is going with a less-comprehensive tabletop tablet solution that enhances the traditional process. Diners will still place their meal orders from a waiter, but the tablets will be there to request drink refills, order desserts, or pay for their food at the end of the meal. Customers won't be forced to embrace the new technology; Applebee's and Chili's will clearly be sensitive to traditional patrons. However, as those customers see the folks who use restaurant-provided tablets being served faster (because they could order as soon as they were ready) and being able to settle up quickly as soon as they were done, the lure of convenience will likely draw more of them as well. Sooner than you'd think, there will be fewer people ordering their meals from human servers, or leaning on them for tech support. Foodies Just Want to Have Fun It's not just the casual dining chains trying to use technology to speed up the process. Online reservations specialist OpenTable (OPEN) revealed this past weekend that it's testing a new mobile payment feature with nearly a dozen San Francisco restaurants. It's inviting a few San Francisco users of its popular smartphone app to add a credit card to the account that will allow for mobile payments to be processed. At the end of the meal, they can view their bill and pay it without having to call for a waiter. That could save servers as many as four trips to the table: one each for the bill request, delivering the bill, picking it up, and returning it after it's processed. The upside to these tech initiatives is that tables will rotate faster, allowing restaurants to serve more customers. The company providing the tablet technology to Applebee's claims that tables turn seven minutes faster once the gadgets are deployed. This will likely lead restaurants to increase staffing among cooks, food runners, and bussers. But don't be surprised if soon, it starts getting a lot harder to find a waiter at your local eatery -- and that it doesn't bother you at all.

A New Strategy for Smart Tech Investors

Leading newsletter publisher Investing Daily is launching a new publication today; Jim Pearce walks us through the strategy behind Smart Tech Investor, highlighting how its indicators determine over- and under-valuation in the sector.

Steve Halpern: Investing Daily is known for some of the advisory industry's most popular and long-running newsletters, including the flagship Personal Finance, and we are here today with Investing Daily's Wealth Society director, Jim Pearce. How are you doing today?

Jim Pearce: Great, Steve. How are you?

Steve Halpern: Very good. The timing of this interview is no accident, in fact, today is the launch of your latest newsletter, Smart Tech Investor. First, can you give us an overview of why you have chosen the tech sector for this latest product launch?

Jim Pearce: Sure. Actually, there are several reasons; one, of course, is that there is an awful lot of interest in tech stocks at the moment.

A day does not go by, it seems like, to me at least, when I am driving in to work, that I do not hear on the radio the latest news on Facebook, Yahoo, Microsoft's search for a new CEO, Twitter's IPO, I mean, it is just all over the news.

A lot of our subscribers have been asking about it. In fact, earlier this year, we began an interview series with a tech sector expert, originally with the intent of just providing some additional coverage for our Wealth Society members.

Over the course of doing that interview series, we realized we had a huge asset in the person of Leo Boeckl, and we wanted to be able to continue to help our subscribers invest better in the tech market. A couple of months ago, we decided to launch a new publication based around his kind of unique approach to evaluating tech stocks.

Steve Halpern: Now, in analyzing stocks, you use a proprietary valuation model that he developed called the BIQ. Could you briefly explain how this works?

Jim Pearce: Sure. The BIQ is spelled B-I-Q and it stands for Boeckl Innogration Quotient, and, of course, Boeckl is Leo's last name.

Innogration is a term that no one knows, because Leo invented it, and I will explain what that is in a second. It is really a model that puts a numerical value on each individual tech stock we cover, based on the three specific elements of Leo's approach to evaluating tech stocks.

Implicit in that is Leo's theory of innogration—and innogration is the combination of the two words, innovation and integration, and, in simplest terms, it is based on the idea that the leading tech stocks of today, and in the future, are those that not only innovate internally, but also use their resources to acquire functionalities from external sources to create a market-leading product.

He has identified three specific variables that contribute to successful integration and assigned a numerical value to each of those, so that the total value, it is a scale of zero to ten, so the highest the company could score, if it is was perfect in every category, is a ten and the worst, of course, is a zero.

I can tell you there are no zeros or tens, but there are some companies that are down in the one to two range, and there are some others that are up in the eight and nine range.

It is a very useful tool in sifting through all the noise in the market to really zero-in on those companies that, not only are popular today, but will be the market leaders in the future.

Page 1 | Page 2 | Page 3 | Next Page The expert featured in this column, James Pearce, may or may not own positions in any investment vehicle mentioned here. The views and opinions expressed are his or her own.