Opening Bell: 3.28.06

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Gasoline Prices Surge (WSJ)
Start listing the usual subjects: Iraq war, Iran elections, Nigerian riots, China, Hurricane Season, the robust economy etc.; gas prices are on the up. This development certainly pleases journalists and other pundits who talk about 'The Summer Driving Season' as if that were a real phenomenon. And since 2006 is the year of ethanol, the article notes there's gonna be a shortage of that too -- thanks.
Series: Next Stop Bombay (Banking Business Review)
Keep those resumes up to date, oh and try to figure out what you actually do at your job -- supposedly that helps when Jamie Dimon comes around looking to make redundancies. Deutsche Bank is the latest to announce significant job transfers to India, up to half of their back office staff. The move is expected to save a cool 1.9 bln Euros, which will probably get split up as bonus money for those that hung around, making the whole thing like a game of survivor; the longer you hang around, the more money left over for you. Of course, cost savings aren't the only reason for the move: The bank said that apart from cost reduction, the change also reflects the changing requests of customers who are demanding more complex transactions often involving different asset classes. Got that? Update: Heh, wrote that before seeing this: JP Morgan to hire 4,000 in India CEO Jamie Dimon also is looking to expand the bank's reach in China.
Goldman Buys KarstadtQuelle Property (Bloomberg)
Goldman Sachs, which appears to be going on something of a buying spree, spent $4.5 billion on German department store KarstadtQuelle. The Firm, which has been raising money for real estate and buyout funds, also is looking to buy a port operator in Britain. Other recent purchases include foreign banks. The company is becoming more and more fund-like all the time. On the one hand their risky trading operations make it much like a hedge fund, while these purchases resemble the private equity deals we've been accustomed to seeing. Who needs Christian Baha's Superfund, when you can just buy a share of Goldman?
Europe Is Back (Bloomberg)
Just as the world was getting ready to dismiss "Old Europe" for being dead, it comes roaring back to life. The Euro is up against the dollar, and business confidence in Italy and Germany has surged to multi-year highs. But what about their pension systems, immigration problems, and decaying health care infrastructure? Forget it. Say what you will, but these are still dynamic capitalist countries, with some of the sharpest business around. Exports are booming (yes, exports), and it's fueling a surge in domestic spending, not seen in a while. Two years ago their death was the prevailing wisdom; once again it pays to be contrarian.


Strong 2006 Predicted For Boeing (MarketWatch)
Who says American can't manufacture and export. Aerospace giant Boeing had a monster year in 2005, securing many large orders, and generally trouncing their subsidized European rival, Airbus. Their new Dreamliner, which they boast will have superior efficiency, capacity, luxury, etc., was a top seller at many of the world's airlines. The momentum is seen continuing into 2006. The company claims the plane is sold out through 2011, and that they are in talks with 30 more carriers. Seriously, this company's 2005 was so good, it had a noticeable impact on the trade deficit.
Lucent Talks Raise Issue of Security (NYT)
Add this one to the list. CNOOC, Dubai Ports, Checkpoint, and now maybe Lucent-Alcatel. The nice old telecom from New Jersey, it turns out, is heavily involved in such areas as ballistic missiles, submarine sonar, etc. Is France a trusted enough ally to allow them this technology? Hard to believe, if an Israeli company wasn't allowed to by an American company whose product was open source.
Mellon Bank In Tax Return Settlement (Pittsburgh Live)
Tell me you never wanted to do this -- in 2001, six employees at Mellon Bank, in Pittsburgh dumped out 80,000 federal tax returns, that they were working, merely to lighten the workload. Surely we've all been tempted, sometime around April 14th, to just crack open a cold one, close your eyes, and fling it into the trash, no? Even the fine of $18.1 million doesn't sound that bad.
Fed Not Likely to Change Interest Rates.... ? (AP)
Perhaps you woke up this morning, saw this headline, and gave your wife a kiss for the first time all month. Sorry, some AP-stringer, publishing at 2 in the morning, doesn't know what he's writing about. Here's what the article was actually trying to say: While the Federal Reserve has a new chairman for the first time in nearly two decades, it is not likely to change the central bank's two-year pattern of pushing interest rates higher. Big difference.
Stephen Roach: US Running Out Of Money (China Daily)
Morgan Stanley's Chief Economist Stephen Roach will either be remembered as a chicken little or an un-listened to Cassandra, or maybe something in the middle. He's been talking about bubbles and crashes and global imbalances longer than anyone else. Here's a quote from a speech he recently gave in China: The net national saving rate the combined saving of individuals, businesses, and the government sector after adjusting for depreciation fell into negative territory to the tune of -1.2 per cent of national income in late 2005. That means America doesn't save enough even to cover the replacement of its worn-out capital stock. This is a first for the United States in the modern post-World War II era, and I believe a first for any great power over a much longer sweep of world history. Scary, but does this vision actually jibe with reality? It seems like our private equity and financial institutions (like the aforementioned Goldman) have more cash than they know what to do with, which explains all of the buyouts, private equity deals, port purchases, stock buybacks, upped dividends, acquisition sprees of rural non-for-profit hospitals.
AMD vs Intel -- the stakes get higher (CNN Money)
AMD's had a pretty great streak against their much larger rival, over the past year and a half. They've gained major market share in the consumer market, added partners, and by many accounts are tops in performance. Some of Intel's old tricks, like cutting prices may help keeping the opposition at bay, but the chip giant's biggest advantage remains their size. In a capital intensive business, like semiconductors, not only is the ability to outspend important, but so is the ability to recover from mistakes. Intel's had plenty of production and design problems recently, but the company isn't hurting from a lack of capital. Had AMD had the same, they might be sunk at this point. Ultimately, what may save Intel, could be an inevitable debilitating error on AMD's part. Perhaps everyone can be a winner though, analysts are predicting two years of good times for the sector.

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