Opening Bell: 6.6.08

Posted by Joe Weisenthal, Jun 06, 2008, 7:22am

walmartnight.jpgWal-Mart growth plan eyes installation services (MarketWatch)
Wal-Mart's on a high horse right now, as its stock trades near fresh highs, and either its customers aren't slowing down their purchases, or the lower-middle class is growing (some will certainly say that). Anyway, among the company's new growth products: electronics services (a la BestBuy's GeekSquad), more sustainable stuff (natch) and financial services, which they'd probably have rolled out a long time ago, but the company is hamstrung by regulators on that one.

Insider Joins Critics of the Fed, Faulting Credit-Crisis Programs (WSJ)
The President of the Richmond Fed criticized the Big Fed for its bailout of Bear Stearns and sundry other moral hazard-related issues. The point: Criticism of the fed isn't limited to outsiders right now. It's funny, because in a way it seems that Fed-bashing has waned a bit in the past month and a half or so, as Bear fades into memory, and the economy hasn't fallen off a cliff (yet). Still funny to see folks talking about moral hazard and risky intervention, when really, that's the logical extension of the Fed, or really any government agency, but the Fed especially. A Fed without intervention is like a fish without a bicycle. Or something like that.

MGM in talks as it plots new golden age (FT)
MGM, which is more of a film distro, is talking with hedge funds about financing its own slate of films including, possibly, the next James Bond. Given the track record of these hedge fund-funded film deals, we can totally understand why they'd be so eager to jump on board

A newer, faster iPhone expected from Apple (Marketwatch)
This is getting so annoying. Just once we'd like to see Steve Jobs announce something that was truly a surprise, much to the chagrin of the Apple fans that actually think they know something. But yeah, come Monday it probably will be another iPhone.

The Rise & Fall of Broadcom Co-Founder Henry T. Nicholas III (GigaOM)
Not that you should judge someone on their looks... but one look at Broadcom co-founder Hentry T. Nicholas III kinda tells you everything you need to know. The dude is intense and frankly scary. Om Malik who's been following the broadband scene forever offers some background on the guy, which when you combine it with his intense jappearance, makes his latest turn less than surprising. The best part is that there's a backdating charge on top of all this crazy drug stuff. And the drug warehouse stuff is pretty weird too.

$45 trillion needed to combat warming (AP)
Not worth it, is it?

Turkish Bonds, Stocks Fall After Court Upholds Ban (Bloomberg)
Now you know that one of our favorite things at The 'Breaker is to find interesting reasons that journalists come up with to explain market movements. This one though has to be a favorite, even if it might be accurate: "Turkish bonds, stocks and the lira fell after judges threw out legislation letting students wear Islamic headscarves, raising the risk that Prime Minister Recep Tayyip Erdogan and his party will be outlawed for breaking laws that prohibit religious influence."

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Posted in: Opening Bell

Comments

1

Posted by guest, Jun 06, 2008 7:50AM

Did nothing newsworthy enough for the opening bell occur at this get-together http://dealbreaker.com/2008/06/manager_of_rogue_trader_calls.php ?

(the article actually refers to junk dating)

inquiring minds want to know.

2

Posted by guest, Jun 06, 2008 8:31AM

non farm payroll day carney, 5%. get on this you scalawag.

chad

3

Posted by big r, Jun 06, 2008 9:00AM

arts and crafts on squawk

4

Posted by onetwo , Jun 06, 2008 9:22AM

First blush at the numbers: the "lossed jobs" came in at/below expectations (-50k v. -60k con). Must of the growth in unemployment was based on an increase in 577k active job seeker. My guess? Those were college kids who just graduated/finished for the semester and are looking for employment. The number isn't nearly as ugly as it seems.

I'd fade about 1/2 the increase.

5

Posted by guest, Jun 06, 2008 9:31AM

bsc summer internship cancellations wreaks that much havoc on the unemployment rate?!?!

6

Posted by girl, Jun 06, 2008 10:01AM

How is it that a country so desperate to be recognized as a modern state (Turkey) can't even reconcile a secular government with allowing their citizens outward manifestations of their faiths? It hardly seems like a one to one relationship. They would be complete idiots to shut down the AKP.

7

Posted by diablo, Jun 06, 2008 10:01AM

onetwo, aren't those stats seasonally adjusted to compensate for that yearly vacation cycle?

8

Posted by guest, Jun 06, 2008 10:04AM

right, and >40k new jobs were created by the birth of new construction businesses? i call bullshit.

9

Posted by diablo, Jun 06, 2008 10:11AM

... and the same model added 9,000 jobs in finance, what the...

10

Posted by onetwo , Jun 06, 2008 10:13AM

Diablo - yes, there are seasonal adjustments made, but if the usual "absorbtion" of college students is 100 units, leaving 30 units (total 130 units of students gradutating) (completely making up numbers here) they adjust for the 30 unit average. If this year's absorption is only 50 units then there are 50 units still counted as unemployed and seeking. That's not to say they aren't truly unemployed (they aren't) but the influx just hasnt been hired yet. It's a bit convoluted, i know, but it's just a first glance thought. I really haven't delved into the numbers.

All in all, the rise in the rate to 5.5% is far more of a labor participation story than a firing story.

11

Posted by onetwo , Jun 06, 2008 10:42AM

Also, Diablo & 10:04 - I am in no way defending the gov't models. There is certainly a lot of noise and bs in them. I'm only commenting on the sharp rise in the "headline" unemployment number.

12

Posted by counterclockwise, Jun 06, 2008 10:54AM

There was some talk on CNBC that although numbers are seasonally adjusted for high school and college students entering the job market, students entered the market earlier than normal in May of this year, throwing off the usual adjustment.

13

Posted by guest, Jun 06, 2008 10:57AM

girl: The reason that headscarves are banned in places trying to maintain secularity is that as soon as some women start wearing them and others don't, the women without them start getting attacked by fundies. This is quite separate from the "foot in the door" syndrome, which is also a concern but, as you point out, fighting it with bans on conduct isn't very democratic.

DB: Think of all the people who have lost money in various idiotic investment schemes - perfectly legal ones, they just made bad decisions and didn't hedge or diversify.

Now imagine how much worse it could all get if anybody who can find a Wal-Mart could participate in financial markets AND WILL BE NAGGED INCESSANTLY TO DO SO BY THE MOST SUCCESSFUL RETAILING ENTITY THE WORLD HAS EVER KNOWN.

I'm not being elitist. I really am not. I just think that the unintended consequences of letting an entity with the aggressive marketing history and unparalleled market access of Wal-Mart into finance would be utterly devastating. You think Congresscritters are hot on regulating to protect Joe Schmoe *now,* wait until he can buy into a REIT or a junk bond fund while he's picking up the groceries.

Oh, sure, it'll be savings accounts and Wal-Mart brand checks to start with, but we all know every bank teller thinks they're the next Gordon Gecko and are just waiting for the opportunity to prove it.

M

14

Posted by guest, Jun 06, 2008 11:05AM

M-- yes, they need professional brokers like you to guide them into adjustables, right?

15

Posted by girl, Jun 06, 2008 11:11AM

@ 10:57

If you take a comprehensive look at any society that balances secular government with a largely Muslim population, you won't see attacks of any sort between veiled/not veiled women. It's an issue of Turkey's desperation to be associated to Europe culturally, when, in reality, everyone apart from the elite of that country represents another demographic altogether.

Anyway, agreed on your other points, including Walmart.

Interesting opening bell @ Joe.

16

Posted by big r, Jun 06, 2008 11:15AM

EU needs Turkey way more than Turkey needs the EU.

17

Posted by guest, Jun 06, 2008 11:23AM

@ girl, US is supposedly a 'modern state' and yet it has made massive attempts as completely snuffing out Christmas / other Christian references.

And no, I have not read Oreilley's War on Christmas. But I did notice that the 'please give us our bonus' card from my building last year said 'happy hanukkah, seasons greeting and a happy new year.' I was appalled at the absence of the main festival from the card - Christmas. And I am not even Christian.

18

Posted by guest, Jun 06, 2008 11:27AM

girl: It's happening in Iraq right now - reported incidents are on the rise. There are areas in Paris' suburbs where women who aren't veiled are considered legitimate targets for rape. It is not a question of religious discrimination: it is a question of public safety.

11:05: I'm not a financial professional, or a salesman, of any kind. Economics and finance are hobbies of mine and I enjoy the articles on this site. If anybody wants to mock me for it, mock away.

M

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Posted by guest, Jun 06, 2008 11:28AM

Turkey is an airplane without a partner.

20

Posted by guest, Jun 06, 2008 11:31AM

@ 11:28 You mean "an airplane without a DANCE partner."

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Posted by guest, Jun 06, 2008 11:37AM

@10:57 - Highly diengenuous statement(s).

- If the issue is with the 'proles' accessing greater financial options, then THAT is what should be regulated. They already have access to these investment options elsewhere. What does this have to do with Walmart?

- If the argument is that Walmart is good at its job and hence needs to be stopped, then that is an even more disgusting argument. This is too Ayn Rand-esque! So you dont care about the critters wasting away their wealth as long as some other critter is facilitating that? You think these payday loan places are run by people who DO NOT think they are Gordon Gekko?

- Access to financial services through Walmart is also about LOW COST access. These are millions of RESPONSIBLE people with fewer means (the same people who are still current on their subprime mortgages, the same people who bought houses they could afford, the same people who buy used cars instead of shiny new ones, the same people who save instead of buying big-ass flat screen tvs) who WANT and NEED access to affordable financial services.

Walmart would be a boon to these people. Also, these people outnumber the critters. But by constructing an argument to protect the critters - these are the people you are actually hurting! The critters will find ways to throw away their wealth, the people will be denied an opportunity.

And isn't that the whole story of socialism? Potray protection of the weak but actually protect the lazy and incompetent and penalize the hard-working?

- You ARE being elitist. Untill I see a proposal for compulsary edcuation / testing before people are allowed to vote - I am not buying any argument to protect these same people from other life options. IMHO, the choice exercised while voting is WAY WAY more complex and consequential than any other.

22

Posted by girl, Jun 06, 2008 11:52AM

@ M- Iraq is a war zone and the Paris "suburbs" you speak of are ghettos! Both highly likely locales for violence and rape. I was thinking more along the lines of Egypt or Syria, for example.

23

Posted by StMarc, Jun 06, 2008 11:54AM

(I got a profile for the Hell of it.)

11:37: Up until now, people who wanted to access investment services (and to be fair, the article said "financial services," which can mean lots of things including reasonably straightforward demand deposit accounts, etc) had to seek them out - go to a bank or a brokerage or whatever. That means that a) they are already in the "I'm doing important money-related stuff" mindset, and b) they've already self-selected by seeking out the services. At least they have a fighting chance - and I'm not as elitist as you might think, because frankly, so long as they knew or should have known what they were getting into, if they lose their money, tough noogies them, as my little sister used to say.

But here's the thing. I am not trying to protect them. I am trying to protect the financial services market. (And not from competition, before you say it. I love competition. Put a bank branch *in* every Wal-Mart and let 'em grub. But don't make Wal-Mart *into* a bank.) Because as soon as you can get into complicated investments at Wal-Mart, a certain number of people are going to lose money. That is inevitable in any investment system, but the thing is, Wal-Mart is big.

Really big.

Really, really big.

Even if the percentage of investors who lose money is the same - and it won't be, because the self-selection will be reduced and a whole new crowd of unsophisticated investors will be targeted by a VERY sophisticated entity that's spent decades learning how to sell them crap they don't need and can't afford - the absolute number of losing investors will go up. A lot. At that point, Congress will realize it can "stand up for the little guy," (i.e. shamelessly pander for votes while addressing the wrong problem with the wrong soluction, their SOP) by wading in and creating a regulatory system that will make SOX look like the rules of checkers.

I am not trying, as I said, to protect the hoi polloi. It's their money, let 'em do what they want with it - including lose it. I'm just concerned about adding a new input stream which will be so massive that it will of necessity cause a massive regulatory upheaval.

M

24

Posted by guest, Jun 06, 2008 12:25PM

What is the draconian regulation that you have in mind that will 'cripple' the financial services industry as it is today?

So Walmart gets a bunch of people off of payday loans and car-title loans onto its books. If anything, given Walmart's size and risk to reputation they will treat these people BETTER than the current breed of financial service providers to this target population. On top it, Walmart will charge less.

And it is not about self selection! Everyone NEEDS access to financial services and Walmart will simply consolidate the disparate offerings to the poor people under one roof!

And lets say people DO realize all of a sudden that they are losing money. What regulation are you EXACTLY thinking of that will 'make SOX look like the rules of checkers'?

To me, the catalysts for triggering such mind-numbing regulation (which I cannot even comprehend) already exist! You are just scare-mongering to simply target one company which will do nothing to enhance whatever already exists!

25

Posted by guest, Jun 06, 2008 12:28PM

I support secularism in government. In fact, I think the separation of church and state is one of the most wonderful legacies left to us. People are free to worship, but not to impose their views. Consequently, we have an incredibly diverse assortment of religions in this country, and very little religious violence.

Oddly enough, our secularism has never had any conflict with our First Amendment rights to wear religious clothing and religious symbols. The right to wear religious clothing and jewelry in schools is protected, and also is protected while working for the government, or serving in the military (although there are some restrictions on clothing). Employment discrimination laws protect people in the private sector from religious discrimination, although there is not as much latitude about wearing clothing not considered appropriate for business.

However, we are not a country or a culture emerging from feudalism. Throughout the Middle East and Africa, and in parts of the world where Muslims have migrated, the right of a woman to be free of a burka has not been firmly established. Wearing a burka (or a head scarf) is a sign of submission to ruling norms as much as it is a statement of adherence to a particular religion. Only when women are given a free choice about wearing a burka is doing so a pure religious expression. Otherwise, it's a sad plea from a frightened woman to spare her from individual and community violence.

I can understand the French and the Turkish not wanting the wearing of the burka to become the norm in their schools. That's why I support the laws we have in the United States allowing the wearing of religious clothing in school. Our secularism is firmly established. I also support the French and the Turkish in their efforts to ban head scarves in school, because they are struggling to maintain secularism in an increasingly hostile environment.

26

Posted by guest, Jun 06, 2008 1:00PM

Playing devil's advocate, we allow women to wear hijab here.

Hypocritical?

27

Posted by girl, Jun 06, 2008 1:24PM

@ 12:28, How is allowing people to dress as they please suddenly going to mutate the law 180 degrees and force women to don burkas and the like? What a ludicrous concept. Most people who do so consider it a personal and religious choice point blank. While I myself detest this enforced modesty in women, I maintain that if women choose to do so, nothing should stop them. It is just as much a right of woman to don a headdress as to wear a bikini.

By enforcing rejection of religous mandates, the government furthermore ceases to be secular because what it is actually doing is making religous choices on behalf of its citizens that it has ZERO right to make.

@ 1:00- Entirely unhypocritical, in fact it embodies the freedom of expression and religion that this country was founded upon.

28

Posted by guest, Jun 06, 2008 1:31PM

I meant hypocritical to expect/want other countries to ban religious expression.

29

Posted by Anal_yst, Jun 06, 2008 1:32PM

Um, Walmart is rolling out installation services just as yesterday Home Depot announced they're getting "back to basics" and nixing their installation services?

Hmmm, very interesting...

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