Ford to Pay 10.6 Percent Yield in U.S. Debt Exchange (Bloomberg)
Psst… want some high-yield corporate paper? If so, Ford is offering over 10% in a new bond offering. It’s a bold move for a company, and strategically probably a wise one. The company is in a high-leverage situation here (remember, people keep referring to auto stocks as options anyway) and since they have to survive now, it makes sense for them to give it everything they’ve got, not necessarily preserver for a future they won’t have. It’s like when you’re down 3-1 in the World Series and your ace is rested. You don’t bench him because you’re worried about who you’re gonna pitch in game six. You worry about that in game six. So Ford is saving its cash now, deferring some payments, and devoting their resources (they claim) to developing some hot new cars which will go toe-to-toe with the Japanese. Sounds exciting. When the cash is owed down the line, they’ll worry about that then.
Phone Tax Laid to Rest at Age 108 (NYT)
There really should be a law that requires all laws to sunset after 10 years and disappear if not renewed. Yes, this does get into a college-philosophy dilemma; but does that law sunset too? Nevertheless, the phone tax, as you know, was initially passed 108 years ago to help pay for the Spanish-American War, which ended after a few months. Even though the war finished up sometime ago, the congress — surprise surprise — never got around to repealing the tax. Hey, would you? But now they’re even repealing the tax retroactively, so if you go through all of your bills, and figure out how much you paid over the last three years, there will be a place to indicate that on your 2006 tax return. You might get as much as $50 back. Awesome. Of course, it’s not really a tax cut without an equivalent spending cut, but…
Arcelor Plans $1.59B Merger With Severstal (AP)
Arcelor was supposed to be spending this week mulling over the Mittal buyout offer. Apparently, that’s not all that was going on behind closed doors, the company found the time to negotiate and agree on its own merger with Russian steel concern Severstal. And in case there was any doubt, this would seem to be their answer to Mittal, nyet. This isn’t the first defensive merger they’ve announced though, since Mittal’s initial offer. Who’s to say that this won’t make them more attractive, as it only means the combined company will be larger?
Fed May Be Less Concerned With Wage Inflation After Pay Data (Bloomberg)
The market may find relief (or even cheer) in surprisingly “benign” wage data. In other words, at least according to the official measure of statistics, wages aren’t going up very fast. The market can take comfort too, in some evidence that the economy is slowing (yesterday’s GDP number notwithstanding). But not too mention the obvious fact, that none of these statistics are, you know, good, it’s not like the Fed’s rate hikes have really been damaging to the market. All that stuff about not fighting the Fed has to be thrown out the window, or will at least need revision, when this chapter of the market comes to a close.

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