Wal-Mart Banking Plan Draws Objectors (AP)
Surprise surprise. A bunch of folks whose businesses might be threatened are coming out against Wal-Mart's aspirations to start a bank. As we've stated before, a First Bank of Wal-Mart would shake up the retail finance industry more than the internet has so far -- that's why everyone is so scared. Predictably, the critics argue that a Wal-Mart bank would destroy local banks. Of course they never finish the thought, i.e. it would destroy local banks because Wal-Mart would offer cheaper, more convenient, banking. Will there be a Wal-Mart M&A division as well?
A Contrarian Speaks (The Capital Spectator)
The bond market is finally capitulating to the strength of the economy, with rates rising on the long stuff to around 5%. But is the strength (most recently demonstrated by a strong jobs report) here to stay? Or is doom and gloom still right around the corner? James Picerno has an interview with Lakshman Achuthan, from the Economic Cycle Research Institute, who sees trouble going forward: Q: We keep reading that the economy's doing fine. The bond market certainly seems to be throwing in the towel after seeing the strength in the March employment report. And that follows other numbers in previous weeks suggesting that the economy has a head of steam. A: That's an ok view near term. I wouldn't argue with anything you just said for the next month or two or three. But once we get into second half of 2006, that logic falls apart.
Fun with USO (Naked Shorts)
Now American households can act just like their favorite airline and attempt to hedge their gas bill by buying oil. The new oil ETF (USO) will launch today and, according to Greg Newton, 25 shares of it will be enough to protect the consumer against oil spikes. Of course, prior to now, buying oil sector stocks would have been done the trick, but a lot of people might be intrigued with the chance to buy oil directly. Maybe if people learn to hedge their fuel bills, there won't be as much uproar about cartels and price fixing every time crude nears 70. On the other hand, pray to god that people don't start talking about where they hedged their fuel bill in casual cocktail conversation. Please, just don't.
Commodity prices set to spiral even higher (FT)
Not sure to what extent you should use a journalist to make your commodity forecasts for you, but if you do, FT's Kevin Morrison says that commodities are set to rise. Though commodities have had a great run, they remain below their all time (adjusted) highs in many cases, while mining companies remain unconvinced of their staying power, and remain reluctant to invest heavily.
Retailers: Please buy a $%#!@& Calendar (The Big Picture)
Last week we noted the rash of retailers blaming a late Easter, of all things, for March sales weakness. Barry Ritholtz has some words for them: Of course, this excuse making is just that; No one believes that these retail sales shortfalls were a surprise that could have been avoided with a $7.95 yearly calendar from Staples. Anyone with more than 2 brain cells to rub together knows that these sorts of excuse are proof positive that some people are completely and totally full of shit. (sorry for the use of technical jargon). So too are excuses about the Olympics hurting sales at a restaurant chain (run a promotion, you morons). I can almost give those retailers a pass who blamed Reagan's funeral -- but then again, I would have put some Jelly Beans, American flags, DVDs and/or a Reagan Biography on sale and advertised a special Presidential Sales event. Of course, it was totally unforeseeable that a 93 year old man with an very advanced case of a terminal disease might die.
Disney To Make TV Shows Available Free On Web (Reuters)
Disney is expected to announce that popular shows such as Lost and Desperate Housewives would be made available for free online, supported by un-skippable advertising. It's the first significant move of its kind, though the recent live broadcasts of the NCAA tournament online, by CBS, demonstrates that big media is warming up to internet distribution. If it works, expect a lot more of this from their competitors -- and if they're smart, they won't limit it to popular shows, but to their deep archives as well. These are criminally neglected assets, currently going un-monetized. This model of internet distribution has been championed by many, including local venture capitalist Fred Wilson.
The Serial Monogamists: Exchanges Can’t Stop Proposing (Dealbook)
We might as well make it a recurring Dealbreaker feature because there doesn't seem to be an end in sight to the hookups, well rumors of hookups, between stock exchanges around the globe. Dealbook has a good roundup of the latest action, which includes speculation about some NYC-Chicago, long-distance relationships as well as some action in Europe.
Swiss biotech Serono withdraws sale offer (BusinessWeek)
Serono, the troubled Swiss biotech, has failed to find an acquirer after 5 months of searching. Even Wall St.'s finest dealmakers couldn't find anyone willing to touch the company, so instead they've decided to pursue acquisitions themselves. Of course, it's not clear who would put themselves up for sale to the company, so like their sale plans, their acquisition plans may be something of a fantasy.
France withdraws youth jobs plan (CNN Money)
Chalk one up for the madness of crowds. The French government has finally bowed to the will of the violent mob, eliminating language in a new employment bill that would make it easier to fire the youth. Of course, that would also make it easier to hire youth workers, a demographic with the highest unemployment rate in the country. It seems like they could have solved the whole problem by having an economist speak before the mob, and explain to them The Lerner symmetry theorem, which technically relates to trade and tariffs, but can be applied anywhere. The theorem states that there aren't one-way streets in economics; if you tax imports, you hurt exports, if you make it hard to fire, it's harder to hire, etc. Next time the French are rioting because they don't understand some basic econ, tell 'em to get Dealbreaker on the line, and we'd be happy to do a series of lectures.
Immigration: Global Economies' Crack Cocaine (Forbes)
Not sure what about immigrants make them crack cocaine, we always thought that immigration was a win-win, but this article does pose an interesting question: What happens to the developed economies when immigrants can make more money staying at home, or worse, they leave their host countries and go home? There were recently riots and strikes among immigrant construction workers in Dubai, with workers threatening to return to their native India. What would this do to Dubai's burgeoning economy, with so much of it fueled by construction? Ultimately, the markets will adjust and do fine, but it may produce some interesting shifts.