Opening Bell: 5.15.06

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J&J to Skip Network TV's 'Upfront' Market (WSJ)
Johnson & Johnson is the latest company to raise doubts about the TV advertising market, with their announcement that they won't participate in the 'upfront market', when advertisers usually commit to buying a certain amount of ad minutes for the following season. Officially, J&J wants to harmonize their ad buying with the rest of their budget planning, but it's clear that the TV stations just don't have the same leverage they once did. They'll probably get it all sold still at a decent rate, but they can't force major advertisers to commit several months in advance as once they could. Obviously, the proliferation of alternative media has a lot to do with it. Another company rumored to be mulling a similar move is Coca-Cola.
More Like the 'Ostrich of Omaha' (BusinessWeek)
Zing! Michael Mandel at BusinessWeek tears Buffett a new one, deriding his pessimism of the US economy, while arguing that things are pretty good here. Mandel's approach is the good old USA inc. approach, trying to give us a DCF. If you believe him, he pretty much debunks all of the pessimists, trade-deficit worriers, dollar bears, market bears, and Cassandras in 500 words or less. To him, it's as simple as the US adding $4-7 trillion per year in value to the economy, while going $1 trillion per year deeper in to debt. We can assure that this article will be the subject of withering attacks by the end of the day; stay tuned.
MySpace to Offer Downloads of TV Show '24' (WSJ)
Fox News is getting into the online-downloads game via their MySpace subsidiary, which they bought last year for $500 million. The company will offer episodes of the show '24' for $1.99 each, with Burger King sponsoring the program. This is the first time MySpace has dipped its toe into the content distribution market; does it pose a threat to iTunes? Time will tell, but if they only serve Fox content, in an unoriginal way, it's hard to see it having much of a dent.
Oil falls on economic worries (Reuters)
Apparently, oil can move for other reasons that simply the vague "supply worries". Demand counts too (Lindsey Graham are you paying attention?). It took precisely two days of a down stock market to give the oil market jitters, something the oil market is used to giving, not receiving. It's not just the oil market, commodities such as copper and zinc were down huge. Apparently, the sinister cabal that controls all raw materials met over Skype last night and decided to bring down the price of their goods in concert. It probably wasn't the stock market, so much as it was fear of yet another week of browbeating from Bill O'Reilly and Lou Dobbs. There is some bad news here since commodity players have been among the main drivers of the stock market, and you probably have some (a lot?) in your portfolio. So any relief you get at the pump may just come out the other end.


Vodafone rises on new Verizon report (Marketwatch)
Rumors such as this get bandied about every few weeks or months, but there seems to be some heft behind this one. Actually, this latest round has been led up to with a steady din of speculation about the terms and price -- the latest being that Verizon will take out Vodafone's stake for $48 billion. According to analysts, that price should give cheer to both Verizon and Vodafone shareholders -- but this seems impossible. Either Vodafone's shareholders got the good deal, or Verizon's did. Or it was neutral. This wouldn't be the most glaring case of this, but in the last year or so, there've been a number of cases in which the acquirer rose on the announcement, which is generally a case of undue optimism. The acquirer, even if you believe the deal was smart, should drop. They're transferring some of their wealth to the other company's shareholders in order to pay the requisite buyout premium.
Yuan breaks key barrier against dollar (Marketwatch)
Remember, as you're reading this, China's not a currency manipulator according to the Treasury. Ok, glad to have that out of the way. That being said, China has decided to let the Yuan appreciate past the psychological 8-to-the-dollar, as the currency opened trading at 7.9976. The country, which doesn't manipulate its currency, had set a target of 7.9982. Someone must have fallen asleep at the wheel to let the currency be off by .0006, but that happens even to the best of 'em. This is good news; look here comes a throng of Chinese consumers to buy non-pirated music, MacBook Pros, Granite Countertops, and Hummer H3s.
A Last Chance to Make a Case (LA Times)
All things considered, one would have to say that the Enron trial went smoothly and quickly once it got going. As Lay sees it, the government signaled that it's case was weak by spending so much time on information related to the issue at hand. That's funny, here we thought it was just our local reporters who ignored the arguments of the trail. Maybe it's not their fault that they rarely touched on the arguments or the facts, but instead rehashed the story of their bankruptcy, or the fact that Jeff Skilling stammered in response to a question, or the fact that Ken Lay appeared to be flustered at a question, or the fact that juror #4 didn't appear to be paying attention when Skilling explained mark-to-market accounting. More realistically, we thought, it was the reporter who couldn't follow the thread. But we'll certainly cut all of the fishwraps a break if indeed the prosecution didn't focus on the facts either. Of course, we can't trust this view completely. It's coming from Ken Lay, who as we know is a scoundrel who sent thousands of old grannies to the poor house, while living in a Houston penthouse.
Retailers to push HD radio hard in several markets (Marketwatch)
Terrestrial (traditional) radio is gearing up to push its alternative to satellite, HD radio. It's ostensibly free, high signal quality programming, though one needs to buy an expensive receiver in order to listen. Though they're banking on the new technology to stem defections to satellite, so far it isn't going well. Here's one problem: has anyone even heard of HD radio? So far, the companies have done a terrible job promotion the medium. Nobody knows what it is, how to get it, etc. Finally, some smaller electronics retailers (and Radioshack) will be stocking the receivers and pushing them hard, though if anything the plan could backfire. It's possible that when consumers finally bite the bullet and decide to spend a couple hundred dollars on radio, they may just buy satellite, with its nominal monthly fee and phenomenally superior programming choices (i.e. Howard Stern). If you're interested in this area, radio consultant Mark Ramsey is a good go-to guy on the subject of terrestrial and HD radio.
Buyers Are Liars (Matrix)
One good sign that we're on the backslope of the housing boom is that real estate brokers have been taking a beating in the media. The Freakonomics guys have giving them a hard time and have been involved in a public spat with the National Association of Realtors, which they see as a cabal, the way see the oilcoppergoldzincsilverpalladium miners. It also doesn't help the realtors that in the age of the internet, it's a lot easier for buyers to find sellers, so they seem quaint sort of like guys in colorful jackets screaming at the top of their lungs on a trading floor. But, like the floor traders, they're not going out without a fight. And they do have a case to make. They still serve as a trusted intermediary and facilitator, in what are some difficult negotiations. Furthermore, as Jonathan Miller points out, buyers and sellers don't like to show their full hand. They don't really like to reveal their true financial state. So the agent decodes the signals that both are giving off, something that neither side has the tools to do. That's not to say that they can't abuse their position, but it may be too early to say that agents will go the way of the square wheel.

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