Microsoft's red-hot 2013 hit a major roadblock recently, when its hugely disappointing Q2 earnings announcement sent shares sinking by double digits. To be sure, there wasn't a lot to like in the news out of Redmond, as the company's precarious place in our increasingly mobile future was brought once again into full light. And while Foolish investors know better to focus on a single bad quarter, it's looking more and more like the issues facing the company will probably produce some pretty nasty long-term side effects for the software giant as well. In this video, tech and telecom analyst Andrew Tonner highlights two key themes that point to Microsoft's recent earnings report and what they mean for investors.

The Connected Car Conference -- or C3, if you wish to get your geek on -- was a big hit at CE Week in New York City. Thanks largely to navigation and entertainment apps on Apple and Google smartphones, it's easy to marvel at how far we've come in bringing our outside world inside our vehicle. But C3 also concentrated on the future, and what automakers and their partners are doing to increase your car's usefulness and safety. 

Our roving reporter Rex Moore talked with General Motors Chief Technology Officer Tim Nixon at the conference. His Chevrolet MyLink system offers Pandora and Sirius XM for entertainment, a BringGo navigation system that runs from your smartphone so your maps are never out of date, and Apple's Siri Eyes Free, which allows you to interact with Siri without having to view the screen. In fact, the screen won't even light up while your car is in motion.

In the following video, Tim talks about the possibility of legislation involving safety in the vehicle, and why it wouldn't be a problem for GM.

Phillips 66 and its master limited partnership Phillips 66 Partners have made the headlines recently, because of how high PSXP climbed during its first day of trading. It isn't the first refiner to find success with an MLP spinoff -- Marathon Petroleum's spinoff MPLX is up more than 16% year to date -- and it doesn't look as if it will be the last. In this video, Fool.com contributor Aimee Duffy looks at Valero's recent affirmation of its plan to convert its logistics assets into an MLP.

Ford's hot-selling Fusion should see even more sales gains this fall. Photo credit: Ford Motor.

This past week, Ford reported a second-quarter profit of $1.2 billion, a strong result powered by big sales in North America and improvements in all of its overseas regions. Further gains in Asia and Europe should give Ford even bigger profits in coming quarters, but Ford is also setting the stage for even more profits here in its home market.

Two of Ford's hottest products right now are the Fusion sedan (pictured) and the F-150 pickup. In this video, Fool contributor John Rosevear explains how the Fusion and the F-150 could boost Ford's profits even further as the second half of 2013 unfolds.

Ford's latest cars and trucks aren't doing well just in the United States. Its Focus has become one of China's best-sellers, and more Fords are climbing China's sales charts. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market," says that Ford is one of two global auto giants exceptionally well positioned to benefit from China's ongoing auto boom. You can read this report right now for free -- just click here for instant access.

In this segment from Thursday's edition of The Motley Fool's everything-financials show, Where the Money Is, banking analysts Matt Koppenheffer and David Hanson discuss the growing concerns around former students being unable to repay loans and the potential reputational risk facing the big banks holding some of these loans.

While many of the biggest banks have scaled back student lending, some firms like Discover Financial Services have moved into the area more aggressively. Matt and David tell investors if they see this as a reason to be nervous about holding a big bank stock.

You can follow David and Matt on Twitter.

A lot of people don't look favorably on crude oil produced in Alberta's oil sands. In addition to the fact that oil sands production spews greater quantities of greenhouse gases into the atmosphere, some have voiced concerns about the physical and chemical properties of the oil.

That's because oil sands crude contains something called bitumen -- a thick, viscous substance that doesn't flow unless it's heated or diluted. For bitumen to be shipped by pipeline, it needs to be diluted with specialty chemicals to produce diluted bitumen, or "dilbit" crude.  

Some argue that dilbit crude is much more corrosive than other types of crude oil and that pipelines transporting it are more susceptible to leaks. But a new study by the National Research Council argues otherwise. Let's take a closer look.

Dilbit crude and leak risks
According to a committee of scientists reporting to the U.S. Department of Transportation, diluted bitumen doesn't pose a higher risk of leaks than other types of crude oil when transported by pipeline.

Scientists found no evidence that dilbit crude has physical or chemical properties that are materially different from that of other crude oils or that would make a pipeline transporting dilbut crude more susceptible to leaks, the NRC said.

The report, which came out June 25, confirms findings from a June hearing last year, in which crude oil transportation experts argued that dilbit upgraded from Canada's oil sands is physically and chemically similar to other varieties of sour crudes.

No mention of environmental impact
Importantly, however, the study focused mainly on whether transporting dilbit crude increased the risk of pipeline leaks. It didn't investigate whether the environmental impact of dilbit crude spills is more severe than spills involving other types of crude oil. Perhaps it should have, because what few examples exist indicate that the stuff is a real hassle to clean up.

Consider the rupture of an Enbridge pipeline, which discharged roughly a million gallons of bituminous crude into Michigan's Kalamazoo River in June 2010. Though three years have passed, the cleanup effort still isn't over. Enbridge employees and state and federal environmental crews continue to test the river, where sheen and clumps of oil still linger. The company reported a 4% year-over-year decrease in its first-quarter net income, partially because of the escalation of cleanup costs related to the spill, which are now approaching a whopping $1 billion.

Similarly, environmental damage from the rupture of an ExxonMobil pipeline carrying bituminous crude oil near Mayflower, Ark., has also been quite devastating, according to several local residents. Dozens of property owners and residents have sued Exxon, alleging that the spill has caused them numerous health problems, including nausea and headaches, as well as property damage and declines in property values.

In addition, Arkansas and federal officials filed a lawsuit against Exxon in June, alleging that the company violated numerous state and federal statutes, including Arkansas' Water and Air Pollution Control Act, its Hazardous Waste Management Act, and the federal Clean Water Act. Depending on the outcome of the case, Exxon could face civil fines ranging from $10,000 to $25,000 a day and federal Clean Water Act violation fines of up to $4,300 per barrel of oil spilled.  

Perhaps more worrying, though, is the alleged lack of transparency in the investigation of the spill's aftermath and cleanup efforts. In the weeks following the spill, several sources reported that the entire affected area was cordoned off and that some news reporters were rejected access to film and inspect the damage.

This strategy of downplaying the environmental impact of a major oil spill is quite reminiscent of what BP did in the aftermath of the 2010 Gulf of Mexico oil spill, when former CEO Tony Hayward suggested that the spill was nothing more than a drop in the ocean. Three years later, the facts paint a different picture; the 2010 Gulf spill is widely regarded as the worst accidental oil spill in history.

The bottom line
All told, while the NRC studies results suggest that bituminous crude oil is no more prone to spills than other types of crude oil, it doesn't say anything about the environmental impact of dilbit crude spills. In my view, this is something that deserves further analysis.

While environmentalists and climate-change groups are sure to be dismayed by the study's results, the committee's findings are good news for TransCanada , which is seeking U.S. federal approval to construct the northern portion of its Keystone XL pipeline.

President Obama is widely expected to approve the pipeline this summer, though he added that he would greenlight the project only if  it "does not significantly exacerbate the problem of carbon pollution."

Photo credit: Flickr/Paul Lowry.

Continental Resources CEO Harold Hamm has a dream that one day the United States will be energy independent. What's truly remarkable about the dream is that there is enough science and technology that could make it a reality. In fact, according to Hamm and others, the U.S. could be the world's top oil producer by 2017, in addition to being completely energy independent by 2020. Can this really be true?

Consider: Texas produces enough oil that if it were a country, it alone would rank 15th in the world among oil-producing nations. The state, of course, has the prolific Eagle Ford Shale as well as legacy oil production out of places such as the Permian Basin. In fact, when combined with the Bakken of North Dakota, these three oil plays have the potential to grow oil production by five million barrels of oil per day by 2017, which could potentially push the U.S. into the top spot.

To meet that lofty goal, the U.S. would need to drill a lot of wells, with estimates of about 100,000 total wells to get oil production up to full capacity, which is up from just 10,000 shale oil wells today. For perspective, that would mean oil companies would need to spend more than $600 billion given the average well cost of $7 million per well between those three major oil shale plays. Further, oil prices would need to stay at least above $65 per barrel to produce an adequate return for producers, though ideally oil would need to stay over $100 to truly give producers adequate incentive.

With oil prices currently well above $100 per barrel, oil producers have plenty of incentive to drill. Continental, for example, has taken advantage of high oil prices to become the Bakken's top producer and driller. The company sees the potential to drill more than 19,000 additional wells in that play, as well as its position in Oklahoma. That potential, when combined with high oil prices, is one reason Continental is expecting to triple its production by 2017.

It's not alone, which is clear by going back to Texas, where the Eagle Ford has been one of the big drivers for EOG Resources . The company, which expects to grow its oil production by 28% this year, has a clear path to grow its oil production by double digits annually through 2017. Overall, the company sees the potential for 4,900 additional Eagle Ford wells, which will enable it to capture about 8% of the Eagle Ford's entire estimated output.

To put this growth in perspective, ConocoPhillips , a more diversified global oil and gas producer, expects to grow its oil and gas production by just 3%-5% over this same timeframe. However, 60% of its projected production growth will come from its U.S. onshore assets. The growth is truly remarkable, as the company expects to grow its Eagle Ford production by 130,000 barrels of oil equivalent per day, or 16% annually, while growing Bakken production by 45,000 BOE/d ,or 18% annually. And last but not least, the company sees its Permian Basin production growing by 40,000 BOE/d, or 7% annually. Clearly, the U.S. is one of the key growth drivers for ConocoPhillips over the next few years.

This brings me to one final point. One area of oil production many overlook is the Permian. That legacy oil play could actually be the best of the bunch thanks to the Sparberry/Wolfcamp, which just might be the second largest oil field in the world, at 50 billion barrels of oil equivalent. That's almost double the Eagle Ford's potential and more than four times that of the Bakken. One company that sees huge potential here is Pioneer Natural Resources . Overall, the company believes it has the potential to capture about 9 billion barrels of oil equivalent as it drills about 40,000 wells over the coming years.

By 2018, this part of the Permian could be producing more than a million barrels of oil equivalent per day, with much more in the years to come:

Source: Pioneer investor presentation.

The potential really is there for the U.S. to become the world's largest oil producer. Still, a lot needs to go right, chief among which is that oil prices need to stay high enough to reward producers for drilling all those oil wells. If that happens, and I believe it will, investors should do very, very well.

Photo Credit: Flickr/Don Hankins

As an energy writer, the most common question I get from friends and family concerns the price of gasoline. Just the other day I was talking to my dad when he mentioned that gas prices back home in New York were now over $3.80 a gallon. I guess I need to stop complaining about local prices that have now shot up to more than $3.30 a gallon.

The bad news, which I had to relay to my dad, is that prices aren't likely to go down again anytime soon. Worse yet, drivers probably should get ready for higher gas prices. Last week's $0.12 jump could only be the beginning because a confluence of factors driving supply and demand are likely to push prices higher. While that's not what drivers want to hear, I do have a solution to help take away a little bit of the pain at the pump.

What's driving prices higher?
Before I give you my solution, let's take a deeper look at the problem. The average retail price of gas is made up of four components. By far, the biggest contributor to the price of gas is oil, which is two-thirds the price of gas. The price of oil is driven by both global and regional market conditions.  

Globally, unrest in Egypt has been a big factor in oil's recent rise. Believe it or not, Egypt is a big deal in the global oil market as it's the largest non-OPEC oil producer in Africa. In fact, U.S. oil and gas producer Apache  is actually Egypt's top oil producer, creating over 363,000 barrels of oil equivalent per day. The concern is that this oil production, as well as oil being transported through the important Suez Canal, could potentially be shut off if unrest in the country turns into an all-out civil war. The global oil markets are simply factoring this potential disruption into the price of oil.

The other problem is more localized as U.S. oil prices are spiking relative to the global oil benchmarks. As of the time of this writing, the spread between U.S.-traded WTI oil and globally traded Brent was a mere $0.30. This past February, that spread was more than $20 a barrel, meaning that oil produced in the U.S. was a lot cheaper to buy than imported oil. A shortage of pipeline capacity created a massive glut of oil in the U.S. which pinched producers' profits but led to big profits for refiners and kept gas prices reasonable. In fact, for every dollar that refiner Phillips 66  could save on domestically sourced oil, the company could reap $450 million in additional net income. That caused its stock to nearly double from the time it was spun off from ConocoPhillips  last April until this past March when it hit its high point. 

If you can't beat them, join them
Unfortunately, the rise in U.S. oil prices are not only causing pain at the pump, but are causing pain for investors in refining stocks. Phillips 66, for example, is down over 17% since hitting those late March highs. That means refining stocks aren't the right investments to combat high oil prices. Instead, the way to profit from the pain at the pump is to simply buy an oil stock.

ConocoPhillips, for example, is up over 15% in the past three months as the company's stock has taken the path opposite the one that its former refinery arm, Phillips 66, took. It's a company that has operations around the world, but it's really benefiting from higher U.S. oil prices as the company has prime position in high-growth U.S. oil fields, such as the Bakken and Eagle Ford. In fact, more than half of the company's oil production growth over the next few years will come from the U.S. Finally, the company also pays a very generous dividend of more than 4%, which can be used to help offset your pain at the pump. So, my best advice to you, and the advice I gave my dad, is that if you can't beat them, join them by adding an oil stock to your portfolio today. 

Another week, another problem with Boeing's troubled commercial airplanes program.

As you've probably heard by now, inspections centering on a Honeywell -manufactured emergency transmitter, that may or may not have been related to a fire aboard an Ethiopian Airlines-operated 787 two weeks ago, have revealed multiple instances of "wiring damage" aboard 787s in the service of airlines ANA and United Continental . This news -- part of a litany of woes involving Boeing planes these past few weeks -- helped to shave 1.3% off Boeing's share price over the course of the week.

But don't you be distracted. Don't lose sight of the bigger picture. Because as frightening as some of these headlines may be to investors, the truth is that Boeing is flying along just fine.

You see, in addition to all the wondering about wiring, we also got some definitively good news out of Boeing last week -- its Q2 earnings report, which came out Wednesday, and featured:

• 11% earnings growth to $1.41 per share.
• Revenues up 9%.
• Operating profit margins up 40 basis points.
• Operating cash flow that nearly quadrupled to $3.5 billion.

To top it all off, here at the halfway mark, Boeing increased its earnings guidance for the full year to as much as $5.30 per share and said that revenues could come in as high as $86 billion as cuts to defense and space exploration spending turn out to be not quite so deep as feared.

A bit of perspective, please
To put it mildly, these are not the kind of numbers you'd expect to see from a company in trouble, and whose customers fear to buy its products. Actually, the contrary is more likely true.

You see, crucial to the good news at Boeing is that backlog at the company grew $40 billion, largely from new orders received in the second quarter. That means Boeing's order book grew 11%, or, put another way, Boeing is taking in orders even faster than it collects revenue on old orders already delivered -- a clear indication that revenue growth is accelerating.

Valuation
How fast is Boeing growing? Analysts say earnings will grow upwards of 13% annually over the next five years. Meanwhile, the company's stock sells for just 10.2 times trailing free cash flow. That suggests that Boeing is stock is cheap even if growth is not accelerating.

Now, add on a 1.8% dividend tailwind, and I think the investors who sold Boeing shares last week have made a big mistake. This stock is a bargain, and despite a few issues with its newest plane, Boeing won't just survive. It'll downright thrive.

The U.S. military has a reputation as a somewhat secretive organization. But in one respect, at least, the Pentagon is one of the most "open" of our government agencies. Every day of the week, rain or shine, the Department of Defense tells U.S. taxpayers what contracts it's issued, to whom, and for how much -- all right out in the open on its website.

DoD is budgeted to spend about $6.2 billion a week on military hardware, infrastructure projects, and supplies in fiscal 2013. (A further $5.6 billion a week goes to pay the salaries and benefits of U.S. servicemen and servicewomen). This past week, though, the Pentagon came in quite under budget, spending just $3.75 billion.

Much of the funds spent this week went to basic infrastructure and construction projects, monies largely doled out to privately held construction and engineering firms. Here's where some of the rest of the money went.

Prepping planes
Northrop Grumman won a $617 million contract "definitizing" the amount it will be paid to produce the first "lot" (Lot 1) of five E-2D Advanced Hawkeye airborne early warning aircraft for the U.S. Navy. Featuring "true 360-degree radar coverage" in all weather situations, Hawkeyes are the Navy's "eyes in the sky," their mission being to expand the horizon around which a naval task force can see, and to manage a carrier's warplanes in the air during battle.

Shifting satellites
Even higher up than the Hawkeye are the military's satellite networks. Lockheed Martin has the contract for one of these, the Defense Meteorological Satellite Program, or DMSP. As part of America's longest-running satellite program, at 50 years and counting, two DSMP satellites are in polar orbit at any given time, tasked with keeping track of the weather, and oceanographic and ground conditions on Earth.

The next two satellites to be launched, designated Flights 19 and 20, have had their launch dates shifted, however, and this apparently necessitated a "re-phasing" of the work Lockheed will do to integrate and test equipment aboard the satellites. On Tuesday, Lockheed won a $101.6 million modification to its contract to perform this work.

And fixing ships
One of the week's biggest winners of U.S. government contracts was Britain's BAE Systems , which won several sizable contracts to perform ship refits on U.S. vessels in drydock. Among them:

• BAE Systems Hawaii will conduct maintenance and repairs on the Navy guided missile destroyer USS Chafee (DDG 90).
• The company's San Diego Ship Repair unit will perform work on the landing ship dock USS Rushmore (LSD 47).
• BAE's San Diego unit will also work on the guided missile destroyer USS Benfold (DDG-65).

In total, BAE won $62.1 million in contracts for ship repair projects.

Opportunities on the horizon
As far as real news goes, that was about it in a really slow week at the Pentagon. However, things could be heating up soon. On Thursday, we learned that the Pentagon has sought Congressional authorization to make not one, not two, but three separate multimillion-dollar arms sales to the government of Iraq.

Armaments destined for the Iraqi military include Textron Bell 412 EP transport helicopters -- a dozen of them. Also, 50 M1135 Stryker wheeled armored personnel carriers from General Dynamics , outfitted for survivability in a chemical warfare environment. And finally, a shipment of spare parts to be used in maintaining everything from Humvees to howitzers to heavy equipment for salvaging damaged tanks from the battlefield.

In total, the Pentagon is asking permission to sell $1.95 billion worth of military equipment to the Iraqis. Congress has 15 days to approve or disapprove the sale. If it does nothing at all, that acts as an assent, and the sale can go through as planned.

Boeing operates as a major player in a multitrillion-dollar defense market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company's execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. The Fool's premium research report on the company provides investors with the must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.

Many investors seek to buy the stocks in the Dow Jones Industrials because they represent the cream of the crop of the U.S. stock market. Yet all 30 stocks in the Dow also share an important trait: they all pay dividends to their shareholders.

Still, dividend investors have gotten increasingly picky about the stocks they choose to meet their income needs, and one important element of making choices for a dividend portfolio is finding stocks that don't only pay healthy dividends now but will also continue boost their payouts in future years. That's why this article highlights four stocks that have made massive increases in their dividend yields since the market last hit record highs back at the end of 2007. Let's look at those four stocks.

Hewlett-Packard
As of the end of 2007, HP stock had a dividend yield of just 0.6%, but in the years since then, the yield has more than tripled to its current level of 2.2%. What makes that yield all the more impressive is that the stock has bounced sharply this year, gaining more than 80% and therefore cutting the yield almost in half from the 3.7% level it boasted at the beginning of 2013. HP had paid the exact same quarterly dividend for more than a decade until it made a 50% boost in its payout in mid-2011, recognizing the value of returning more cash to shareholders. Even through tough times last year in the midst of multiple failures in past efforts at restructuring, HP kept paying dividends, and now that the stock appears firmly on the comeback trail, investors increasingly believe that focusing on more profitable business lines could produce even greater dividend growth.

Intel
Chip giant Intel has gone from a typical tech stock to a Dow dividend giant, with its yield having risen from 1.7% at the end of 2007 to 3.9% today. The company has doubled its dividend over that period of time, but the other part of the yield equation hasn't been as kind to investors, as Intel's share price has actually fallen over that period. Intel had the financial strength to withstand the market meltdown, but its ongoing struggles to adapt to the mobile revolution haven't resulted in the growth that investors would prefer to see. Until the company can capitalize more fully on newer technology, Intel's status as a mature tech company with more prospects for dividend income than future growth could hold the stock back.

ExxonMobil
The oil giant's dividend has risen from just 1.5% in 2007 to 2.7% today, with an 80% rise in per-share dividends accounting for pretty much the entire increase in its yield. Energy prices remain reasonably strong, with oil still trading at triple-digit levels despite huge production gains from unconventional drilling practices. Yet despite the powerful earnings that the favorable energy environment has produced, ExxonMobil still struggles with the need to replace declining production from older wells with new finds that are large enough to make a significant different in its total business. Combined with share buybacks, Exxon returns more capital to shareholders than any other company, and that's likely to continue as long as Exxon doesn't find the need to make a massive strategic acquisition that uses up its available ash.

Microsoft
Microsoft has boosted its dividend yield from 1.2% in 2007 to 2.9% today, with its quarterly dividend having more than doubled. Like Intel, Microsoft has seen struggles in producing sizable growth from its core business in a world in which PC demand has started to decline dramatically. Yet by returning more capital to shareholders, Microsoft reminds investors that its legacy businesses still generate huge amounts of cash, and even if they're in decline, they'll likely keep rewarding dividend recipients for years to come. If the company's planned restructuring can reinvigorate its product innovation, moreover, Microsoft could finally reawaken growth to go with its solid dividends.

Accept only the best
The best stocks offer not only good yields but improving payouts. By focusing on the stocks that will give you favorable dividend characteristics, you'll reduce your chances of being disappointed by the dividend stocks you own.

An 8-pound, 6-ounce package captured the world's attention this week. Prince George Alexander Louis, the newest heir to the British throne, arrived Monday at St. Mary's Hospital, London. With a net worth measured in the tens of billions, this baby boy could use some stock picks to keep his empire pulling profits. Here are three stock ideas for the prince's portfolio.

1. Boy toy
Royal or not, every boy needs a toy. Mattel is a worldwide leader in the toymaking business, and its operations have pulled in major profit for investors over the past few years. Since our Motley Fool Income Investor newsletter recommended the company in August 2011, shares have bounded up 93%, 38% more than the S&P 500's remarkable 54.8% total return. In the past ten years, Mattel has managed a whopping 200% gain, versus the S&P 500's 108% rise .

MAT Total Return Price data by YCharts

While George might not go bananas for Barbie or American Girl, he can hop on board with Hot Wheels and Fisher-Price, as well as licenses for Thomas & Friends, Toy Story, and Cars. 

Source: Mattel.com.

Naysayers (understandably) point to the demise of physical toys, but Mattel has made its mark with strategic partnerships such as an Angry Bird board game. If Mattel can adapt to the changing child-entertainment world, its 3.3% dividend yield will keep George in golden diapers for plenty of years past potty-training.

2. Gimme those car keys
Sniff ... they grow up so fast. Before we know it, little Georgie's going to be ready to sit his royal tuckus in the driver seat. Tata Motors offers a flashback to the days of British colonialism, although this time it's India with the ownership. Although the South Asian automaker is most famous for its Tata Nano, the world's cheapest car, Prince George would probably have his eyes set on Tata's Jaguar Land Rover subsidiary.

Source: Jaguar.com. 

The company bought the failing British business from Ford in 2008 for a paltry $2.3 billion, and sales have skyrocketed ever since. It's now Tata's most profitable entity, and it has enjoyed major sales growth in Asia. With its new entry into the Australian market, this might be George's best ticket to reliving the British Empire's heyday.

3. Power to the people
If the current royal regime is any evidence, George is going to be around for a long time to come. Although it's not as fun as a toy or as fast as a car, the prince needs to consider long-term income earners as well. British-American utility PP&L puts electricity in the homes of his subjects, while offering a delectable 4.7% dividend on the side. With share prices still wobbling around recession-level lows, you and George could benefit from a long-term value grab as economies (eventually) pick up in the years to come.

PPL data by YCharts

Its U.K. regulated division pulled in more than half of the company's Q1 profits, and PP&L's newly submitted eight-year plan is designed to keep the company pulling profits well into the future.

Fit for a king?
The newest addition to the royal family has a long life ahead of him, but it's never too early to start planning for a profitable future. Make your smart stock picks today, and you'll be well on your way to a royal retirement.

In this series, we'll explore the data announcements and events that may affect the performance of bank stocks during the upcoming week.

With earnings season over for the Big Four and other regional banks wrapping up their reports as well, bank investors should turn an eye toward the two biggest macroeconomic factors for insight into how the banks will move on from here. This coming week is a doozy for both factors -- housing and employment -- and will provide plenty of food for though and/or trading.

Housing

• Pending home sales (Monday): Showing the number of homes currently in the sales process, this index can indicate how buyers are feeling about the market and the availability of credit. For bank investors, this report can also give a sense about the number of loans currently working their way through the closing process. Though Wells Fargo noted that its pipeline for new loans was smaller at the end of the second quarter compared with the prior one, new surges in buyer demand could be helping drive more business to the banks.
  
• Case-Shiller price index (Tuesday): As we've been seeing for some time, home prices are rising because of the unbalanced supply and demand for homes. Even though the interest-rate environment remains low, higher home prices could help the banks' revenue streams by allowing a greater amount of interest to be generated from new loans with higher principal balances. Though it may want volume to drive its growth in the mortgage market, Bank of America could very well gain ground by selling new mortgages to its wealthier clients -- allowing larger loans to advance its place in the origination hierarchy.
• MBA purchase applications (Wednesday): There has been a solid trend of declining activity in mortgage applications over the past few weeks, with last week's report showing another 2% drop. But with interest rates falling for the first time in more than two months, there may be new incentives for buyers to lock in the low rates now.
• Construction spending (Thursday): As we've seen from the past weeks' sales reports, home inventories are below the six-month range that economists view as a good balance between supply and demand. The construction spending report will give investors a glimpse of homebuilders' confidence in the housing market's continued advances, as well as their outlook on newly constructed home sales. This report also gives bank investors a sense of whether lending to construction firms is growing or softening.

Employment

• ADP employment report (Wednesday): The ADP report gives some dimension to the labor market, as it allows investors to see the number of employees and their pay within the private sector. The data also helps investors interpret and extrapolate information later in the week when used in tandem with the Labor Department's overview of the employment situation.
  
• Employment cost index (Wednesday): Giving a more total picture of labor costs, the employment cost index allows investors to see wage trends as well as risks of wage inflation, which is a big no-no for the Federal Reserve and a sign that interest rates could rise.
• Jobless claims (Thursday): This weekly report has been under close scrutiny ever since Fed Chairman Ben Bernanke reiterated the Fed's focus on employment statistics. Though July has been inconsistent because of factory closures and school vacations, analysts believe that the rate of new unemployment benefit applications are consistent with a stronger labor market.
• Challenger job cut report (Thursday): Basically a rehash of the weekly jobless claims report, the Challenger report does provide some more information about where new layoffs are occurring by giving industry- and geographic-specific details.
• Employment situation (Friday): This is the big one the markets will have been waiting for all week. From the Department of Labor Statistics, the situation report gives the most complete look of the labor market: who's not working, who is working, what they get paid, and how many hours they're working. This report gives investors the greatest ability to determine the current strength of the labor market as well as its outlook.

Other important events to watch

• Federal Open Markets Committee meeting and announcement (Tuesday and Wednesday): Every six weeks, the FOMC meets to discuss the current moentary policy and the need for any changes. Following the two-day meeting, Bernanke will make an announcement of the course the committee's decisions set during that meeting. The latest speculation sees the Fed reducing its monthly bond purchases by $20 billion beginning in September, though investors will have to wait until Wednesday to find out whether there's any merit to that rumor.
• Various consumer and investor confidence reports (Tuesday and Thursday): Three reports come out this week regarding either consumer or investor confidence in the economy. Confidence plays an important role in the economic recovery, since a consumer or investor who lacks confidence is unlikely to part with his or her hard-earned money on either new goods and services or new investments.
• Personal income and outlays (Friday): Giving bank investors insight into the trends for personal income and spending, this report will be very important for both JPMorgan Chase and Citigroup , which both operate large credit card divisions. The most recent trend has been positive for both income and spending, so the credit card providers may be on the receiving end of new outlays.

This week is packed with tons of new data that can sway the market one way or the other. And though it's important for bank investors to be in the know about the facts that could affect their investments, trying to study all of it can become overwhelming. Pick a few events or reports that seem most important to your investment and start from there. And as always, you can find more coverage of all this info at Fool.com.

The Aston Martin DB9 is arguably one of the world's best-looking cars, but its V12 engine, originally designed by Ford in the 1990s, is getting long in the tooth. Photo credit: Aston Martin.

This past week, German automaker Daimler announced a new deal with Aston Martin, the tiny British company famous for its line of sleek -- and expensive -- sports cars.

Under the deal, Daimler's Mercedes-AMG unit, which is the high-performance arm of Mercedes-Benz, will work with Aston to develop an all-new line of V8 engines for the next generation of Aston Martin cars.

Mercedes-AMG will also help Aston develop the electronic controls for those new cars, a critical -- and expensive -- part of making autos nowadays.

So what does this mean for James Bond's favorite carmaker? And what does it mean for Daimler and Mercedes?

A deal that Aston needs, badly
It's pretty clear what this means for Aston: survival.

Since Ford sold it to a group of private investors in 2007, famed British sports-car maker Aston Martin has had a somewhat rough time.

The economic crisis hit all of the high-end carmakers hard in 2008, but most of Aston's rivals are owned by major global carmakers, which gave them access to the resources needed to keep their products at the cutting edge. That has cost them: Aston's sales were down 10% last year, even as other luxury car brands saw sales increase.

But while Ford set Aston up with a new factory and some great engines a decade ago, the little British firm has had a hard time finding the resources to keep up with rivals such as Fiat's Ferrari and Volkswagen's Lamborghini.

Aston's recent models have all been visually stunning, and the interior trims have always been some of the nicest in the world -- an Aston Martin hallmark. But in terms of performance, the latest Astons are increasingly outclassed by the Ferraris and Lamborghinis that Aston Martin would like to be competing with.

The problem is Aston's engines, which are a series of V8 and V12 power plants that have their roots in old Ford designs dating back well over a decade. In fact, Ford still builds the engines for Aston, in a corner of a giant Ford engine plant in Germany, under a deal that was signed when Ford sold Aston.

They're nice engines, and Aston has updated them since parting ways with Ford, but they're not really competitive with the latest high-tech offerings from Ferrari and others. (They're arguably not even competitive with the engines that General Motors has been putting in its Chevy Corvettes lately.)

Aston's deal with Ford is expected to expire this year. And Aston, which once upon a time built its own engines by hand at great expense, isn't equipped to build -- much less to design -- a competitive modern high-performance engine that can comply with global emissions and safety regulations.

That's why Aston Martin needs Mercedes and AMG: It urgently needs new engines, and help developing new models.

But what does Daimler get out of this?

A marketing coup for Mercedes, and maybe more
Mercedes-AMG -- which car enthusiasts usually just call AMG -- was once an independent company that souped up Mercedes-Benz sedans, but nowadays it's the part of Mercedes that develops limited-run, high-performance models. It's roughly comparable to the "M" division at BMW.

What AMG gets out of this is a little bit of scale, and a little bit of prestige. Aston sells a few thousand cars a year, mostly to wealthy auto enthusiasts; having it known that those cars are powered by special engines cooked up for Aston by Mercedes won't hurt Mercedes' reputation with wealthy buyers one bit.

As part of the deal, Daimler will get an ownership stake in Aston, up to 5% as the deal progresses. These are said to be non-voting shares, but it's possible -- this wasn't announced -- that there's an option for Daimler to buy more (or even all) of Aston at some point down the road.

A good deal all around
It's looks like a good deal all around. Aston urgently needs a partner, and AMG, which has the technical savvy Aston needs along with the brand prestige that Aston's customers will want, seems like a fine choice.

For Daimler, it's the kind of deal that could yield some big marketing benefits at relatively small expense. And for car nerds around the world, it's going to be very interesting to see what these two old companies cook up together.

On this day in economic and business history ...

The company now known as Verizon was first created when Bell Atlantic announced its acquisition of rival telecom GTE on July 28, 1998. The $52.8 billion megadeal immediately vaulted the as-yet-unnamed Verizon (it would be nearly two years before "Verizon" was chosen as the new telecom's corporate name) into the highest levels of American telecom power. Of course, a deal of this size prompted federal regulators to announce plans for a close examination, as Bell Atlantic was already the largest local phone company in the United States, and the two telecoms would also combine to serve 10.6 million wireless subscribers, nearly a sixth of the entire U.S. wireless market at the time.

It took two years for the deal to work its way through the regulatory process, and by the time the two companies officially merged into Verizon, they served 77 million wired-line subscribers. Verizon became the 10th-largest company by revenue in the U.S. in its first year of operation, and its wireless partnership has long held on to the subscriber lead, with more than 106 million subscribers reported in its 2012 fiscal year a nearly fivefold improvement over the 23 million subscribers reported after the merger closed. Verizon's importance to the engines of American prosperity earned it a spot on the Dow Jones Industrial Average a mere four years after its creation.

Boil 'em, mash 'em, stick 'em in a stew
July 28, 1586, is the earliest precise date known for the introduction of potatoes to the European continent. That day, Sir Walter Raleigh and Thomas Harriot returned to England from a voyage to the New World with some of the hardy tubers in their cargo hold. Some records exist of potatoes in Europe from as far back as the mid-1570s, when Spanish explorers returned with potatoes from their colonies. However, for its precise date and for its importance to later Irish economic development, the 1586 introduction should be considered vital.

Today, the potato is the fifth most important crop in the world, but it achieved this status in Europe far later than the four other largest staple crops. It remained largely a curiosity in the Old World until the 18th century. Once potatoes became widely accepted, they imparted enormous benefits to the European continent -- a study by Nathan Nunn and Nancy Qian discovered that potatoes were responsible for at least a quarter of Old World population growth between 1700 and 1900. In Smithsonian magazine's feature on potatoes (a worthwhile read for curious food-history buffs), one historian is quoted as crediting the potato with the rise of the West.

A sequence of success
Illumina went public on July 28, 2000, becoming one of many companies to see its stock more than double on the first day during the end of the dot-com bubble. Its initial $16 pricing became a $39 share price by the end of the day, turning the unproven company into a $230 million market-cap multibagger in just a few hours while leaving more than $100 million in financing on the table.

Illumina stood out from the fly-by-night websites that typified dot-com investing excess, because it would soon become one of the leaders in the fast-moving field of genome sequencing. Exactly five years earlier, on July 28, 1995, scientists working for the Human Genome Project had successfully sequenced the first complete genome, that of bacterial influenza (a cause of pneumonia and meningitis, but not of the flu, which is caused by a viral infection). Less than a year later, the project would near its goal of sequencing the complete human genome -- and that goal was reached in 2003, two years ahead of schedule. By this point, Illumina had joined the race with a genotyping product of its own, and by 2005 Illumina stepped to the fore of genomics with a whole-genome sequencing product.

Today, Illumina dominates two-thirds of the global sequencing market. Tomorrow, it might be anyone's game. The cost of sequencing a complete genome has already fallen from $70 million in 2002 -- when Illumina launched its first genomic product -- to less than $7,000 today, according to the National Human Genome Research Institute. Such rapid progress points to one of two situations -- dominance by the incumbent, or an uprising of next-gen technology.

Investors can't complain about the performance of the S&P 500 so far this year, with gains of nearly 20% since 2013 began looking especially impressive when you consider that the year still has five months to go. But when you look at some of the other S&P indexes, you'll realize that even with its outsized gains, the large-cap space hasn't given investors everything the stock market has to offer.

Where the best gains are
In fact, when you compare returns across stocks of various sizes, you'll get some surprising results:

• The SPDR S&P 500 ETF weighs in with 20% gains with its exposure to 500 of the largest companies in the U.S. market.
• When you step down to mid-cap stocks, though, you'll get even better returns, with the SPDR S&P MidCap 400 ETF posting returns of 21% so far in 2013, based on the performance of 400 mid-sized companies domestically.
• The smallest companies in the market have done better still, as the SPDR S&P SmallCap 600 ETF has given investors impressive 24% returns since Jan. 1.

Why are smaller companies outperforming the largest stocks in the market? Historically, smaller stocks have posted better long-term returns than their larger counterparts, with theoreticians pointing to the greater risk involved in small-cap stocks as justifying the higher risk premium that investors should demand in order to hold them over the long run.

But there are also a couple of reasons specific to the current environment that have supported small-cap stocks lately. One is that as merger and acquisition activity has risen, small-cap stocks have benefited disproportionately, as large companies tend to be the acquirers in such transactions and end up paying premiums over prevailing share prices in order to buy out their smaller targets. By contrast, small-cap companies that get bought out often exit with a bang, going out in a blaze of soaring-share-price glory.

The other is that the U.S. economy has been relatively healthy compared to those in the rest of the world. Increasingly, large-cap stocks tend to be more exposed to the global economy, collectively getting more of their revenue and profits from overseas and therefore suffering when sluggish conditions abroad hold back their international growth prospects. By contrast, small-cap stocks in the U.S. are often still laser-focused on growing their domestic business, and with U.S. economy conditions continuing to improve, those small caps reap more of the benefit.

What's next?
The flip side of the relationship among different-sized stocks is that during bear-market periods, large caps have often held up better than their smaller counterparts. So if you believe a correction is imminent, banking on continued small-cap outperformance could leave you disappointed. But if you think the bull market has further to run, then small caps might be able to sustain their outperformance and make their more risk-tolerant investors happy for months or even years to come.

When making an investment decision, prudent investors seek to understand exactly how a company makes its money and what risks, current and future, could derail the company's earning potential. To do that, investors of public companies need information. 

Banks apparently don't see it that way. Quietly hiding behind industry lobbying groups, banks are fighting regulations that would require increased granularity in fee income sources in their quarterly financial reports.

After witnessing banks like Wells Fargo and Bank of America pay hundreds of millions of dollars for malpractices surrounding these very fees, and as TD Bank pre-emptively refunds customers before regulators force the issue, it's clear that this granularity is needed.

In the video below, Motley Fool contributor Jay Jenkins discusses how the new regulatory landscape is more pertinent than ever for investors, as the risk of millions of dollars of fines and reputation risk to the franchise warrant the increased disclosures.

First, Netflix decided it wanted to HBO. Now, Starz wants a piece of the action with an original program called Black Sails, due to air next January.

Starz pulled out the stops at San Diego Comic-Con with a large booth populated by a replica pirate ship meant to give visitors a feel for the show. Starz treated fans to a screening Thursday night during the con with music performed by show composer Bear McCreary, whose other credits include the reimagined Battlestar Galactica and The Walking Dead.

The show, set 20 years before Robert Louis Stevenson's classic book Treasure Island, focuses on pirates who face enemies all about as they fight to preserve a criminal haven known as New Providence Island. Executives no doubt hope the series and its dark undercurrent proves appealing to the tens of millions who have taken to Game of Thrones and The Walking Dead.

There's merit to the plan. Offbeat and edgy original programming has proved to be an attractive alternative to network TV fare in recent years. Black Sails fits the mold.

Starz also needs the help. Revenue growth has gone missing as debt has ballooned since 2011. Meanwhile, Netflix's sweeping deal with Walt Disney means the network won't have access to Marvel, Star Wars, and other popular properties come 2016. Executives have until then to develop a cost-effective portfolio of originals and licensed programs capable of igniting growth.

Unfortunately, there's no guarantee that original programming will pay off. Look at Netflix. For as good a draw as House of Cards was, the new Arrested Development failed to draw even a million new members. Netflix shares sold off as a result, and that's in spite of a significant earnings beat.

So while I'd love to believe Black Sails will take TV's treasure island, as an investor, I'd rather add Starz to my watchlist. Here's how you can do the same.

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on CECO Environmental (NAS: CECE) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, CECO Environmental generated $17.0 million cash while it booked net income of $11.0 million. That means it turned 12.5% of its revenue into FCF. That sounds pretty impressive.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at CECO Environmental look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With questionable cash flows amounting to only 7.3% of operating cash flow, CECO Environmental's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 3.9% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 15.3% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

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We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

• Add CECO Environmental to My Watchlist.

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Bristow Group (NYS: BRS) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Bristow Group burned $304.7 million cash while it booked net income of $130.1 million. That means it burned through all its revenue and more. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Bristow Group look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With questionable cash flows amounting to only 0.7% of operating cash flow, Bristow Group's cash flows look clean. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 4.3% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Is Bristow Group the right energy stock for you? Read about a handful of timely, profit-producing plays on expensive crude in "3 Stocks for $100 Oil." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

• Add Bristow Group to My Watchlist.