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Opening Bell: 4.25.06

Reynolds Agrees to Buy Conwood for $3.5 Billion (WSJ)
Sometimes there's market failure and sometimes there's market success. The fantastic performance of tobacco giant Reynolds, at a time when the whole world is against it (or they claim to be), is a testament to the market. That being said, Reynolds is now expanding their line of smokeless products (chew), with the purchase of privately held Conwood, the #2 smokeless player. We keep waiting for a wave of popularity in New York for the smokeless stuff -- or any other town for that matter where smoking is becoming increasingly illegal. When will we see dedicated chew bars, with spittoons at each table?
Tesco to raise cash from property (Reuters)
Tesco is moving forward to extract money from their land operations and pay a one-time lump sum dividend to their shareholders. This has been an increasingly popular strategy ever since Eddie Lampert showed that the real value of a retailer is the land it sits on. Some even think that the best thing McDonalds has going for it is its real estate holdings, though evidence would suggest it's their Dollar Menu. Still, it never makes much sense to us -- how do you extract value from real estate when it's got a freakin' Tesco sitting on it?
OTC BB Volume (The Big Picture)
Whoa, check out this chart of volume on the OTC BB market. This is one of those telltale signs of excess speculation that no amount of Larry Kudlow optimism can explain away. We knew that the penny stocks had been doing there thing again, but volume appears to be orders of magnitude higher than it was in 2000 -- and those were some crazy times for penny stocks. Wild!
The great Google float (RoughType)
If you're involved in financial services, you've got to love the float. For the rest of you, it's the lag time between when a bank or insurance company takes your money and gives it back to you. During this time, they can invest it, collect interest on it, or do whatever they want. Even Google loves the float. Any publisher using Google Ads must wait until they've earned $100 before they can cash out. During this time, any money raised can be invested, put in t-bills, whatever. It's not a small amount. There's tons of bloggers running adsense, making money at a snail's pace, making money for Google until the distant day when they get to $100. Gotta love the float.

Futures markets on housing (The Korea Herald)
Yale economist Robert Shiller has really been pushing hard for his future's market in housing, a market that would supposedly let people hedge the value of their homes. So far, it doesn't seem to be taking off, so he's really trying to build up the buzz, publishing articles on the subject. The problem, it seems, is that the entire market is being marketed to homeowners, as protection for their investment. From the beginning, it's been like a foregone conclusion that housing prices would fall dramatically, hence the need to hedge. This is probably a function of Shiller's own contrarianism and pessimism. But every market needs not only hedgers, but speculators too -- people that will bet the long side of housing. Who is trying to get them to bring liquidity into the market? Everyone wants to protect their assets, but who wants to insure the assets that everyone claims is at bubble levels these days?
One Day, That Economy Ticket May Buy You a Place to Stand (NY Times)
Could it be true? Could an individual's airline dollar actually be getting less these days -- on a road to even less in the future? This sounds like one of those things that people say, without actually taking into accounts something (inflation, hedonics), though it does seem possible. If airline dollars aren't going as far as they used to, then what's the reason? Surely it's some regulation-induced market failure, right? Someone with more expertise should what's going on.
AT&T Earnings Jump 63 Pct. on SBC Merger (AP)
Never understood headlines like these. Yes, they're really common, and no they're not a big deal, but shouldn't the headline actually, you know, convey some information. Saying that the SBC merger fueled a 63% rise in AT&T's earnings is completely misleading.
Canaries at the Periphery (Michael Shedlock)
Pessimists have been doing the Cassandra routine for a couple of years since the founding of the nation. Some of their points are good, and some are meaningless. It's been an increasingly ominous few years since all the stars seemed to be aligning to presage some sort of crash in the US economy/dollar/market. Alas, no such crash has occurred, which of course, in their view, means it's going to be even worse when it comes. Talk about stacking the deck, it's all bad news with them. Some of the stuff about housing euphoria seems spot on, witness Donald Trump getting paid $1 million by the Learning Annex to tell a bunch of would be real estate moguls, that what they really need is to be vicious. On the other hand, citing a drop in the Saudi Arabia stock market is a canary in the coalmine, that portends doom to the US seems like it's stretching. Granted, doom may come to the US. That's always possible. But the idea that Saudi Arabia, a dictatorship that has seen a startling inflow of assets of late, might be just that -- a shaky economy dealing with an embarrassment of riches.
Executive Says His 'Rules' Didn't Properly Credit Another Text (NY Times)
Yesterday, The Times reported on the case of William H. Swanson, CEO of Raytheon, who produced his own book of folksy business wisdom. Everyone loved his homegrown insights but, unfortunately, many of them were plagiarized from another book in 1944. Today he's apologizing, which is great, but it seems like The Times is missing the real story. All of this business wisdom is warmed over tripe. For example: Cultivate the habit of boiling matters down to the simplest terms: the proverbial 'elevator speech' is the best way? Uh, is this business advice, or is this a Successory? To be fair to Mr. Swanson, it's about as good as most of what we've come to expect from the business advice market. Still, it would seem that plagiary is the least of his worries.