Opening Bell: 4.7.06

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Senate Deal on Immigration Falters (NYT)
Things were looking good when we went to bed last night, but disputes over parliamentary procedure (the bedrock of democracy) threaten to delay the vote until after the Spring recess, "...raising the possibility that the painstakingly negotiated compromise might unravel as it is exposed to intense political scrutiny during the two-week Congressional break." It's a bad sign when two weeks of scrutiny threaten to sink the bill. It's always much better to just vote on it before the public has had a chance to check it out. Either way, they probably didn't have much of a chance to reconcile their bill with the radical one likely to come out of The House, which would make every illegal immigrant a felon overnight. Imagine that, 12 million more felons. Feeling secure? Hey, at least then the house would be ok with them working in agriculture, as their argument has been "let the prisoners pick the fruit". Quick question for those who think that all these immigrants are bad for the economy -- would China be the emerging powerhouse it is, if, say they had 300,000,000 like we do? Nope, people=growth. You've got to reread your Julian Simon.
U.S. senators unveil plan to rein in big oil, OPEC (Reuters)
Hmm, you think there's a direct correlation between oil prices, and politicians wanting to regulate the oil market? (duh). Haven't watched O'Reilly since the last time crude was near 70, but we imagine he's calling for Lee Raymond's skin once again. The latest plan in The Senate would allow class-action suits against OPEC for price fixing. Don't you wish you were a lawyer now, and could get in on some of that action?
Three Words You Never Saw in the Same Sentence (Jeff Matthews)
Jeff Matthews has been harping on the perceived idiocy of the bond market for some time, and the their inability to recognize inflation when it smacks them on the face. Today he points to more signs of inflation, like office space shortages, oil shortages, and a rare retracement in steel prices, as they head back to earlier highs. Our question: So? Why are any of these things signs of inflation, and not just rapid growth that are pushing the edges of our current capacity. Why should the fact that landlords have good pricing power, because office space is in such high demand, make anyone less interested in bonds? Perhaps all of these things do signal some sort of overinvestment, in which case the high prices serve as a very useful signaling mechanism, telling business to slow down.
Study shows stock spam boosts prices (Security Focus)
A study presented at a Vancouver, Canada conference suggested that stock spam can in fact boost the price of small companies, and that the spammers do tend to profit. The two authors found that the average stock rose 1.7% the day of the spam campaign, and then generally fell .9% the following day. Good to know. It's not clear whether sell-side analyst's daily reports sent via email were included in the study.


Retailers Blame Later Easter for Sluggish Sales (WSJ)
The "Late Easter" excuse, which Wal-Mart whipped out earlier this week, got a little more mileage as more retailers reported soft March same-store scales. So, you promise to make it up an April, right? Some of the other misses include Family Dollar, Costco, and Ann Taylor. We didn't realize these companies were so Easter dependent. Honestly, we didn't realize that Easter was really a major shopping holiday, other than a few things for the kids.
Consumer Confidence in Economy Improves (AP)
Good news if you put much stock in polls, consumers feel pretty good. Despite rising interest rates, gas prices, and Lou Dobbs scaring people every night, consumers generally felt pretty good. They also reported that their back hurts, and that they wish their boss weren't such a jerk.
Lay-Skilling, Week Ten (Tom Kirkendall)
As Houston Attorney Tom Kirkendall sees it, "After only one week of the defense's case and the tenth week of trial, it has become clearer than ever that the Enron Task Force's prosecution of former key Enron executives Ken Lay and Jeff Skilling has become the purest attempt to criminalize corporate agency costs of any prosecution since the bursting of the stock-market bubble of the late 1990's." True or not, 'tis the season for disgraced bubble-era figures to get public redemption. Go Defense! Here's another statement to let sink in: "Business decisions necessarily involve judgments over various possible alternatives, and the nature of business risk means that a number of those decisions will ultimately turn out badly, as certainly occurred at Enron. But rather than allowing the civil justice system to sort out responsibility for such a loss, the Enron Task Force's mindset is to criminalize the loss by appealing to the jurors' hindsight bias and urging them to convict Lay and Skilling of making "the choice of seemingly riskier alternatives." As corporate law experts Stephen Bainbridge and Larry Ribstein have long maintained, shareholders deserve protection from theft, but not from risk taking, and it's not clear that government prosecutors know -- or even care about -- the difference."
Thai markets post strong gains on the back of PM’s resignation (Asia Finance Blog)
It always seems like it must be humiliating when a stock price jumps after a CEO resigns or is fired (resigns). The amount of the jump quantifies the negative value that the market perceived the CEO to be bringing to the company. So imagine how it must feel when an entire market rallies on news that the Prime Minister is leaving as is going on in Thailand. The Nation (Thailand) adds the following: Businessmen have hailed Thaksin Shinawatra's decision to step down as prime minister, saying it would pave the way for the economy to resume its expansion of 4-5 per cent this year. They said that while the interim government's focus would be on political reforms, to ensure continued economic growth the government should also go ahead with some of the planned mega-projects, while stabilising oil prices and interest rates. And that note, do you think it sounds silly that the Thai government could unilaterally stabilize oil prices? Well, our politicians sound just as dumb.
Chinese Pay Credit Cards Off In Full (Bloomberg) (Via UTC)
Remember when Secretary Snow went to China, about six months ago, and said that what they needed is to get nice and leveraged like Americans are? Well, the Chinese are taking to credit cards, but they don't seem to get the point... they're paying them off in full every month! This isn't good news for Citi and HSBC, who aren't making a lot of money without penalties and interest rate spikes. While the number of credit card holders has grown 13-fold over the last two years, only 2% let their balances roll over from one month to the next. At least it's a start. Maybe they need to institute penalties for early payments.

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