• 17 Mar 2008 at 6:53 AM

Opening Bell: 3.17.08

finpanic.jpgNikkei Down More Than 3 Percent (AP)
So the foreign markets did their whole dance last night, taking the brunt of our woes, just as they have been for days and days now. And interestingly, despite early optimism that “everyone but Bear” would have a good day today, that wouldn’t appear to be so. Index futures are already sharply lower. Bu-but… isn’t the latest intervention a sign that the Fed is willing to do anything to avert a crisis? Unfortunately, that’s all we’ve had for months now. If there’s one thing we know conclusively, it’s that the Fed will step in to avoid a short-term panic. That’s never really been in doubt. If the Fed has what it believes is a way to avert a collapse, it will. So eventually, that knowledge ceases to have the same currency as it otherwise might. Now what would be nice: some actual good news. Like, just plain old profits and stuff.
A Stake Through the Heart (WSJ)
We don’t get off on schadrenfruede too much, but WSJ does a good job of roundup the richers that have lost a whole lot of skrilla on the Bear Stearns collapse. Some names: (obviously) James Lewis, Dallas-based James Barrow, Legg Mason, and Bruce Sherman, who’s also lost a lot of money in the newspaper biz over the last few years. Lewis: he’s is the big one.
Things You Can Buy For $2 (Long or Short Capital)
This is a handy list of what you can do with each share of Bear Stearns that you sell to JPM: 2 limes. 1 organic avocado. 15% of a drink at a bar. A pound (sterling) {Ed note: that’s our favorite of the list, by far}. Anyway, lots of good stuff. What are you doing to do with your money?
Dollar Falls Below 97 Yen, First Time Since 1995, as Fed Cuts (Bloomberg)fell below parity with the Swiss Franc, whose official ticker is CHF (Something about the Helvetic Confederation). One bright spot: at least you probably didn’t transfer your dollars into Linden Dollars, a few years ago. That’s the currency of the virtual world Second Life, which few folks really talk about anymore. Alex Kirtland put together this chart, which shows that the Linden Dollar has sagged against the dollar over the last few years. How many currencies can say that!?
Japanese Managers Say Economy Is Deteriorating, Nikkei Reports (Bloomberg)
The real question has to be the Japan question: Is the best the US can hope for the Japanese experience of the 90s? A long slow, painful slog of wasted economic time? Are we destined to have zero growth rates and negative interest rates and soup lines in the middle of Manhattan? We’ll pass on that question. In the meantime, Japanese business leaders are not feeling good about the economy, which they deem to be deteriorating. Out of curiosity, we just did a Google News search for the term “soft landing” and found nothing, except this article about the Icelandic economy. Apparently, they don’t see a soft landing or a hard landing in their future.
Fed Chief Shifts Path, Inventing Policy in Crisis (NYT)
Years ago, when we first started reading about Ben Bernanke, we saw that his economic education was forged out of an interest in the Great Depression. His view: If you want to understand extreme situations then you have to study them, and not just assume that they’ll be rare. Or something like that. So now here he is, faced with an extreme situation, which may call for unusual Fed action. Stil: There’s a big part of us that wishes he’d get on the dais and sound the alarm about inflation and moral hazard. For real. We just know it’s never going to happen.
The New Committee to Save the World (Felix Salmon)
So some combination of Dimon, Bernanke and Paulson is the new Greenspan, Summer and Rubin. Okay. You know what’s great in times like these: Nobody really gives a damn about the President. Like seriously. In the constitution, the President has a few distinct roles:Commander in Chief is one. Head of the executive seems pretty clearly within his power. But over the years, the office has taken on all kinds of new functions, like: mourner-in-chief (after school shooting), environmental defender-in-chief (after oil spills), educator-in-chief (?), etc. But he’s never finance-minister-in-chief. When things are teetering on the edge, nobody looks to the President, at least not seriously. Sure, you’ll get a check for $400 in the mail, but obviously that’s a joke, and pretty much everyone knows it. So yeah, nice to get out from under the President every once in a while, even if it means bank failure. Anyway, besides the discussion about the various committees to the save the world, it’s obviously time to talk market for lemons again. Who else is worth $2/share? Funny (also via Felix): Nouriel Roubini is on the sanguine side of the Bear collapse.

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  • 14 Mar 2008 at 8:10 AM

Opening Bell: 3.14.08

spreadhseet.jpgChrysler tells all employees to rest in July (Detroit Free Press)
We mentioned yesterday that Chrysler’s latest executive add was an ex-Toyota guy. But we’re wondering what he thinks out of the latest news: the company is shutting down for two weeks this coming July in order to save money. The news was announced in an email sent by CEO Bob Nardelli to the troops. It’s a rather un-Toyota move, since there whole thing is flow and continuity. Maybe it is that bad: so much inventory and waste in the process, that they’re willing to grind the global gears to a halt, with all that entails, to get a clean start. And just curious: is Bob Nardelli a manufacturing guy? Because the idea of just shutting down and starting over sounds like something that works on a spreadsheet if you’re trying to play a little catch up, but seems fairly disconnected to the shop floor.
Microsoft, Yahoo meet to talk merger: report (MarketWatch)
Various reports yesterday said Microsoft and Yahoo met to discuss their deal… perhaps the first official meeting between the two sides, but hard to say. Apparently they weren’t so much negotiating, but rather Microsoft was pitching its case on the benefits of the deal.
Paul’s Weather Theory of Socioeconomics (Infectrious Greed)
A cool theory on how the weather reports can teach you about the local economy. Example: in San Diego, apparently, they typically start of weather reports about how bad the weather is in the rest of the country (rain, hail, wind, snow, sleet, etc.) before getting to the part about how it’s a slice of heaven in San Diego. The theory: it’s basically a way of making people who live in the heart of subprime-ville feel a little better about themselves. The theory also extends to Brazil, but you can click through on that.
Update on Weekend Storm (Joe Sobel’s Weather Blog)
We’re having a hard time divining the socio-economic implications of this particular weather-related blog posts. But we’re still a big fan of Joe Sobel’s weather writing: He uses words like “maybe” and “suspect” a lot, conveying a very appropriate level of uncertainty. More weather reports should try to do the same.
The Root Cause of Email Overload (Evolving Excellence)
So more wisdom from people who understand manufacturing, but this time it’s something relevant to you: the root cause of email overload. We’re still under a mountain of RSS feeds and we’re fearful that we won’t climb out of it. It might be time to take the Nardelli tack — erase everything and start with a clean slate.

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  • 13 Mar 2008 at 7:34 AM

Opening Bell: 3.13.08

fistfulofyen.jpgDollar Plummets Against Yen (WSJ)
Dollar below 100 Yen: This is sort of like the Dollar dipping below parity with the Loonie, but it’s not quite as painful, since it’s not our obnoxious neighbors to the north. Like, you don’t often hear Japanese citizens going on and on and on about their healthcare system and how wonderful it is there. Do they have national health insurance there? They must, since we’ve heard a million times that the US is the only industrialized nation without it. That being said, if you compare one Dollar to one Yen, the Dollar still owns big time..
U.S. to Revamp Credit Rules, Drawing From Crisis Lessons (WSJ)
With help from the almighty, let this be the last credit crisis of all time. Barring divine intervention, maybe there’s something our politicians can do. Apparently lawmakers plan to produce, try not to ralph, a broad blueprint affecting every corner of the credit industry, which will provide for greater regulation and, of course, increased transparency. You know, sort of like Sarbanes-Oxley was supposed to do, but didn’t. In an interview, Hank Paulson told the WSJ: “We aren’t singling out any group of market participants, because…there were mistakes made by all.” Yeah, they’re going after everyone.
New Inspections Ground 38 Southwest Jets (NYT)
Awesome. We at the Opening Bell are flying Southwest today.
Can a Toyota Man Fix Chrysler? (NYT)
If you’ve read between the lines of almost two years of the Opening Bell, you know we’re sort of Toyota fans. Not just the cars — though we did have one for many years, and yes, it basically required 0 maintenance, and no we did not take particularly good care of it — but the whole manufacturing culture. So it’s cool that the latest vice-chairman at Chrysler is a 37 year Toyota vet, there to bring the wisdom of Shingo et. al. to the struggling, Cerberus-owned automaker. Not surprisingly, he’s described as a quiet guy that’s mainly into substance, but they’ve already got him doing some dumb sounding marketing with live cattle and beef jerky.

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  • 02 Jan 2008 at 7:34 AM

Opening Bell: 1.2.08

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Chinese Yuan Advances to Strongest Since End of Dollar Link (Bloomberg)
The Yuan doesn’t operate on a purely free market, but then again, there aren’t many currencies that do. Mainly it’s that China is more direct about its goals. You don’t have a situation whereby every politician claims to be committed to a ‘weak Yuan’ policy, and yet it goes up. Basically, they maintain a tight grip on the price, letting it rise incrementally over time and that’s the deal. Anyway, a new high on the Yuan was made, and assuming things stay the same, we’ll probably see more of these over the course of the year.
Best Bet for Next President: Prediction Markets (WSJ)
Justin Wolfers, the pro-sports betting economists popular with the Freakonomics set, is going to be doing a series of articles for the WSJ over the coming year on the role of prediction markets in understanding the Presidential election. Should be interesting, and it’ll give us just a smidgen more of a hook to talk politics from time to time. We’re actually pretty curious what he’ll have to say. So far, we’ve been a bit underwhelmed by what we’ve seen on Intrade. Rarely do we see any indication of anticipatory power, but rather the numbers seem to move after the conventional wisdom of changes. Perhaps we’re reading things wrong. We’d like to know.
Reinsurance Trial May Ask: What Did Buffett Know? (WSJ)
We had forgotten about this story. A much-anticipated trial of certain General Re executives is set to begin, and there’s talk that shots will be taken at Mr. Buffett. The man had a great week in the press last week, as Berkshire Hathaway made several high profile moves, but the beginning of this case may bring him back down to earth a bit. Of course, he’s not actually on trial. And ultimately, regardless of what he know/when he knew it, it’s doubtful that his armor will take too much of a puncture.
For Celebrity Magazine, Pregnancy Is a Bonus (NYT)
We really can’t get enough of the Jamie Lynn pregnancy story, and if we had to guess, we think it’ll be a boon for the girl’s career. That being said, the NYT offers a look into the world of checkbook journalism at the celebrity mags. OK! magazine won the right to talk about the story, but there’s more to the competition than just a straight up bidding war.

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Vintage Tracks

wanttohearasecret?princesstoadstooliseasy.jpgWho: Mario Gabelli, some other industry people
What: Barron’s Roundtable Discussion
Where: I don’t know, a Sheraton?
When: 23 January 1995
Barron’s guy: “Name the most important events of 1994.”
Industry people: “Peso devaluation blah blah blah rate hikes blah blah blah.”
Gabelli: “The major events of last year, as far as I’m concerned, were Feb. 4, March 14, Nov. 8, Aug. 12, and Oct. 14. On Feb. 4, the Fed hiked interest rates. On March 14 came General Electric’s hostile takeover bid for Kemper. That was a big gong sounding for a whole new wave of takeovers — which I will get into. Nov. 8 was, obviously, when the Republicans came into power. Aug. 12 was the baseball strike. And Oct. 14 was when Pulp Fiction opened.”

  • 03 Dec 2007 at 7:13 AM

Opening Bell: 12.3.07

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lennatract.jpgTroubled Builders, Bargain Seekers United
Troubled homebuilder (aren’t they all?) Lennar has sold a big tract of 11,000 homes to a division of Morgan Stanley for $525 million. Previously the sites had been marked on Lennar’s books as being worth $1.3 billion, so maybe we’ve got another big mark-to-market event here, a la E*Trade. There are some stipulations here, such as Lennar being able to buy the homes back, and the builder will retain an equity stake in them, but it still looks like a firesale. Then again, a firesale is probably better than no sale. Part of it, notes the Journal, is tax considerations. You can’t take losses on asset depreciation unless you’ve actually booked sales. Perhaps Lennar & Co. will just sell off everything, establish as much as they can in tax-loss carry forwards and then get into a totally new business with confidence that they won’t have to pay taxes on profits for a long time.
Venezuelans Reject Chavez’s Plans for Constitution (Bloomberg)
But wait, isn’t Venezuela supposed to be a communist dictatorship a la Cuba? Well, maybe it’s not quite there yet. Suffering the first significant defeat of is Presidency, Venezeulan voters ended up rejecting, in a national referendum, proposed changes to the constitution. The best is that only about 56 percent of the population, which comes off as surprisingly low in an emerging (somewhat) economy facing a huge issue. Great to see that even there, rational ignorance is alive and well.
The Dollar Is Falling, and That’s Good News (NYT)
The decline of the Dollar does not tell some metaphysical truth about our existence. It doesn’t speak to any fundamental flaws in our character, or even our economy. The real problem: it makes us feel bad about ourselves, especially when we compare the imDollar to the Loonie or the Euro. It’s all about ego and insecurity, and if we could be more Yogi-like, then it’d be no big deal. That’s the message of Tyler Cowen, anyway, writing is latest Times column. Is it just abdication or rationalization? Perhaps. Though he does raise some points: But from a broader perspective, the value of the dollar hasn’t fallen quite as much as it might seem. Since President Bush started his second term in January 2001, to Nov. 20 of this year, the dollar has dropped 19.8 percent — if we weight the dollar by how much America trades with individual countries. That is a noticeable decline, but it is hardly a radical economic event. Certainly worth a read.
Dollar Falls as Moody’s Prepares Rating Cuts on Subprime Losses (Bloomberg)
Meanwhile… just in case the decline of the Dollar does mean something, here’s the latest. Down against the Yen and the EUR again. One analyst from UBS had this to say:“U.S. monetary policy may tilt more toward a dovish stance… The dollar’s allure may diminish.” Huh. Oh, and Moody’s is prepping a big general downgrade of subprime debt, though we’ll go out on a limb and predict that it’s nothing the market hasn’t already priced in for some time.

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  • 27 Nov 2007 at 10:51 AM
  • Barclays

Is Barclays Lowballing Itself On Purpose?

Barclays said today that in spite of writedowns due to subprime, etc., it predicts that 2007 will exceed last year’s profit, though just barely. Everyone (traders especially) thinks this is good news, and if we were talking about Citi it definitely would be, but making a pound more that least year means that Barclays earnings will have moved an insignificant 4 percent, compared to the gigantic growth seen in the last four years. Barclays’s estimate is “broadly in line with” analysts’ average estimate of about $14.7 billion (7.1 billion pounds), news which move the stock as much as 6.2 percent in London trading. Interesting. What I’m getting at is that Barclays is trying to cover up a record 75 percent increase in profit for 2007, so that whenever that actual numbers come out, they can say they “beat” analysts’ expectations, and continue to recover from a 7-week losing streak. That or they’re just trying to cushion the blow for the inevitable admission that those rumors about a $10 billion writedown were true. I can’t decide which.
Barclays says on track for 4 pct 2007 profit rise [Reuters]
Barclays May Match 2006 Profit This Year [Bloomberg]

  • 26 Nov 2007 at 7:46 AM

Opening Bell: 11.26.07

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caselevin.jpgBHP Bid for Rio Tinto Loses Confidence of Investors (Bloomberg)
It may not be totally DOA yet, but signs are pointing against BHP’s play for Rio Tinto, which is too bad. BHP has already lost a cool $32 billion in market value since the plan was originally announced, and you have to figure it’d lose more if the deal were actually accepted, which they’re a long way away from. Rio has made pretty clear that it has no interesting in a sale. Just a thought: if the deal did go through, would it be the AOL/TWX of the commodity boom? Not so much in terms of it being a bad idea, but in symbolism.
Holiday Sales Increase; U.S. Shoppers Spend Less on Average (Bloomberg)
Already we’ve seen a million conflicting reports about how shopping went the last three days. But then we saw several conflicting reports by Thursday afternoon. As you’ll notice, none of them say much of anything — just a bunch of hedging and statements that could be taken multiple ways. As you can see, holiday sales are up, but shoppers are spending less. Go figure.
Dubai Investment Fund Buys ‘Substantial’ Stake in Sony (WSJ)
(Abu) Dubai investment fund Dubai International Capital has taken a stake in consumer-electronics maker Sony according to the firm. It’s not clear how big of a purchase was made, though it seems likely to have been under 5 percent, since no regulatory disclosure was made.
Online Holiday Shopping Season Kicks Off (AP)
Take an extra long lunch break today, it’s Cyber Monday! You know the day everyone gets back to their computers at work and just browses the internet all day for Christmas gifts. Don’t worry if you get caught, everyone’s doing it! Except they’re not. Every year, retailers put out spin about Cyber Monday and what a great day the Monday after Thanksgiving is for ecommerce… and every year the press eats it right up, basically publishing a press release as an article. But as folks who have looked into this know, there’s nothing special e-commerce wise today. It’s definitely not one of the biggest online shopping days of the season. So take that shopping break at your peril.

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