James Cameron: News Corp's Billion Dollar Man

Hollywood is on fire these days at the box office, having just set records for cinema receipt revenue in 2009 of more than $10.5Billion the trend looked to continue into 2010, and at the center of box office success now stands a single filmmaker: James Cameron.

The latest film from the man behind Terminator, Aliens and Titanic is called Avatar, and it seems like quite a few people have seen it already. $1.0Billion in ticket sales worldwide in only 17 days makes Cameron the only Director with 2 films crossing the lucrative billion dollar mark. His last directorial feature Titanic just happens to be the biggest movie of all time with a box office gross of $1.8Billion.

All good news for News Corp (NWS), as its 20th Century Fox movie division has hit a home run here with the marketing and technical logistics of Avatar, a 3D adventure film based on a far away world showcasing next generation computer generated characters. By no means was this film a sure thing and with reports of ballooning budgets and muted anticipation the execs at Fox certainly had reason to worry. Cameron's eye for visuals and his general audiences flair for story-telling went on to rule the day and 3 weekends into its box office run Avatar remains at number 1, at a time when blockbusters generally open to huge crowds and dramatically fall-off at a clip of nearly 50% each weekend. For Avatar, buoyed by the holiday season, each weekend's drop has been nothing short of remarkable, under 10% in both cases, signaling continued word-of-mouth and repeat business.

News Corp. over the last month, in the lead up to Avatar and its continued success has seen its stock rise 14%, this compares for a 2% rise in the Dow and a 5% rise in the Nasdaq. But there's another success story to come from the Avatar-verse, and that's the pioneers of the biggest movie experience around, IMAX (IMAX). With the stock gaining 23% over the last month, Avatar is to be the biggest IMAX movie to date besting the performances of Transformers: Revenge Of The Fallen and The Dark Knight.

IMAX is being promoted heavily in the media as the best way to fully experience the world of Avatar and this comes as no surprise since the screen and sound systems are amongst the biggest and most powerful in the world. In a technological age in which Hollywood tries every gimmick to get the movie-goer to pay up for the experience it is these event films, these Concorde moments in cinema, the Avatars of film-dom that make the proposition worthwhile. Avatar in this sense is the real deal for Fox and News Corp. and from a business sense, with IMAX 3D commanding between 2-3x the admission price for a regular cinema screen, IMAX is the real deal as well.

Disclosure: Author holds no position in NWS, IMAX

Stock Climb continues, S&P above 900

Despite what should have been a corporate backlash against recently announced plans by President Obama to curb corporate Tax Havens and loopholes, markets brushed off worries with a shrug and kept pushing higher. This sent the Dow to the green by 200 points, while the S&P however was the big winner of the day, climbing higher by 3.3% to finish at 907.

The changing tax rules, which are estimated to bring in $210Billion in additional tax revenue over a decade, are in part a response to the growing easiness by which corporations shelter income with offshore holdings offices in countries with low to nil tax rates. By having these subsidiaries, overwhelmingly popular with Financial Institutions, which ironically are the same ones who have taken most of the $700Billion in TARP bailout money, companies can avoid paying taxes by shifting money around and through other countries. Considering a report from January pegged 83 out of the 100 biggest corporations having overseas "offices" in tax havens, the amount of money in lost tax revenue adds up.

The 2nd part of this change is driven by economics, as incentives are re-created in order to spark employment and investment in the domestic United States. Previous policies and tax incentives had been adopted to spark International Investment, however, the current unemployment situation in the US has made keeping Americans employed a top priority for the new Administration.

In other news, despite the tie up with Italian car maker Fiat, amongst other restructuring plans, Chrysler still anticipates losing nearly $5Billion in 2009, with a minute return to profitability by 2012.

Financials continued to rally again today, despite Fed Stress Test results that are likely to indicate several banks that need additional capital. Amongst those, it is being reported that Bank Of America (BAC) is looking to raise $10Billion in fresh equity capital. The stock today was up almost 20% compared to the Financial sector's gain of nearly 6%.

The summer movie season is getting started, and that means it is the time for the popcorn blockbuster. First up is a continuation of the X-Men franchise from 20th Century Fox, a studio owned by News Corp (NWS). The X-Men comics were created by Marvel Entertainment (MVL), and the first 3 films in the franchise has grossed over $600Million in domestic box office. X-Men Origins: Wolverine tells the origin story of the most famous mutant of the group and despite the sting of a piracy leak, which put an unfinished version of the film on the Internet a whole month before release, the film managed excellent $87Million domestic and $160Million Worldwide box office tallies. The popularity of the character is surely showing among movie fans and this will likely mean a continuation of other Marvel properties that Fox has the license too. Marvel itself also stands to benefit as its license fees are typically tied to box office receipts and up front payments.

So with the March and April rallies continuing to mount, is it time to take some profits? Since March lows, the S&P is up 220 points, or 32%, and with an economic situation just barely showing some glimpses a case can be made that the markets have gotten ahead of themselves. Taking some off the table would be a prudent thing to do for Investors, however any leg down or significant down day is an opportunity as valuations are still attractive and the S&P is just broken even for the year.

Disclosure: Author owns MVL, holds puts in BAC