Opening Bell: 3.29.06

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Bernanke Raises Rates, Driving For Five (NYT)
Did you expect that Bernanke wouldn't be an inflation hawk? Apparently some in the market were surprised, though really what's 25 basis points now? Guess we might as well blow the lid of some the market's biggest scandals right off the bat here: First, The Fed doesn't really know the difference between 4.75% rates and 5%. It's an art at best. Second, the idea that since January, Bernanke & Co. really have a clearer picture of the economy is absurd. Even with all the real time data available, monitoring the economy in real time comes close to violating Heisenberg's uncertainty principle. Sometimes you've just got to wing it. We'll address the third scandal (probably the biggest), that monetary policy has no effect on the economy, in a later Opening Bell.
Bidders Line Up For Pfizer's Consumer Business (WSJ)
With the prescription drug business at an uncertain state, why is Pfizer is spinning off their stable consumer products line, which includes such great brands as Listerine, Bengay, Visine, and Sudafed? For one thing, consumer staples bring a rich premium right now, so the timing may be right if they're looking to "unlock value". Over time, it also makes Pfizer a more exciting, volatile company. Their pipeline is weak right now, but it won't always be. When fortune turns, and they hit upon the next Lipitor, they'll be unbridled by their slow-growing brands that Wall St. forgets about. It's similar to when Corning got out of some their old-line glass businesses during the telecom bubble, to focus on optical fiber. When the bust happened, they looked stupid, but when the LCD boom hit, it was all growth again.
China Buying Up America pt. 34324 (BusinessWeek)
BusinessWeek fulfills their "China taking over the world"-story quota, by noting that the country's foreign currency reserves hit $854 billion, surpassing Japan's legendary stash, which stands at $850 billion. In case you hadn't heard, the article points out that China makes a lot of DVD players, sneakers, and furniture that Americans can't resist gobbling up. But isn't most of the 'imbalance' due to real estate fueld borrowing? And is that so worrisome? Houses, for most people, are the equivalent of a business' one-time expense. The low interest rates have greatly expanded the percentage of the population for whom housing is available, hence the upward push on debt. To ease your mind, economist Russ Roberts offers the following mental experiment, to demonstrate that China isn't an economic threat to the US: Even with China's tremendous growth over the last 20 years, America's per capita income is many times higher than China's. What if you woke up one more morning and discovered the whole thing was a lie. The Chinese had mismeasured their national income information and it turned out that the Chinese, in fact, had a per capita income many times that of the United States. It could be true, you know. Maybe they really are really, really, really rich. How would it change your well-being? Would it make any difference whatsoever?


EU Wants Microsoft To Limit Features On Vista (Reuters)
The EU wants Microsoft to cut down on many of the features in its forthcoming Vista operating system -- perhaps they hadn't noticed that the company is doing a good job of this already, as they've been routinely chopping features from the product in an attempt to get it out as soon as possible. The fact that anti-trust actions are still going on in the EU and South Korea seems downright quaint and harkens back to a time when people really believed that the company had unbreakable grip on the computer market. Now people are asking whether Old Softy can even hang on, under competition from Google, Apple, Linux, et. al. Oh, and what are the EU's demands? Apparently, they're worried that Internet Explorer will unfairly route users to MSN search. The EU must like their rankings better in Google. Give it up.
GM To Restate Results For Financial Unit (NYT)
This would have only been a surprise if it hadn't happened, but yes, GM's financial wing, GMAC, has accounting problems as well. This might hurt any hopes that the company had in spinning this unit off, as a way to raise cash. Who's going to pay for a unit whose bonds have also been downgraded to junk status. This company is Fannie Mae meets Enron aboard the Titanic, with 100,000 union workers scrambling for about 7 life rafts. Here's an honest question: Are the executives and directors concerned about personal criminal liability, now that the investigations and subpoenas are bound to come fast and furious?
eBay In Court To Defend 'Buy It Now' (FT)
The Suprem Court hears the case of MercExchange Vs. eBay today. The former claims a patent on the 'Buy It Now' feature in internet auctions, and is seeking an injunction against the auction giant from using it. Now the idea of patenting 'Buy it Now' sounds like patenting The Prisoner's Dilemma, or some other well-worn aspect of game theory. Surely there's some prior art on this stuff. At issue in this case is not the patent itself, but whether an injunction is the proper legal response to a patent violation. As more and more companies look to invest in patents, with the aim of suing corporations, the injunction threat is a powerful inducement to help get to the negotiating table (see: RIM vs. NTP). Definitely a case worth watching.
The First Crude Oil ETF (Capital Spectator)
Is it a sign of a market top that the first ETF to represent crude futures will soon be on the market (ticker: USO)? It wasn't a top for gold, which debuted in ETF form almost two years ago, and has since had a solid run. Still, with oil in the mid 60's, there are certainly a lot of people who wish that it had been available. Of course there's always been oil stocks, which have been a decent proxy for the dark stuff -- that's not the case gold-mining stocks, of which there are few blue-chip caliber names.
Time Warner To Make Internet Push (WSJ)
It's 2006, and the AOL merger didn't work so well, to Time Warner is looking to see if it can make money from this whole internet thing. The company was once an innovator, back in 1994, making content free on their Pathfinder service. That model of free, ad-supported content, was probably the right way to go, but the early success of AOL, with their paid, walled-garden approach, may have confused some of the early visionaries. Now, 12 years later, they're trying to do it again, using CNN Money as an anchor for free content from their print publications Business2.0, Fortune, and Money. It could be a profitable exercise if they turn this location in to a key financial portal on the web.
Hooters Air Bites The Dust (Myrtle Beach Sun News)
Ask anyone; it just hasn't been a good time to launch a new airline. If oil were only at $40/barrel, the airlines claim they'd be minting money, alas prices are not so favorable. Upstart independence Air learned that the hard way last year. After three years, the niche carrier whose stewardesses wore the Hooters uniform, is folding its wings. Maybe they can sell their assets to the soon-to-launch Virgin Air.

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