Opening Bell: 5.2.06

Author:
Updated:
Original:

Stock market futures up after late-session fall (Marketwatch)
Sure, Jim Cramer can move the occasional quasi penny stock in after hours trading by repeating a ticker and yelling 'Mon Back, but can he sink the entire market with a few minutes to go in the trading day? That's what Maria Bartiromo did yesterday, after passing on some juicy gossip that Ben Bernanke had whispered to her at the White House correspondence dinner. Apparently he was misunderstood and the rate hikes may continue. What's weird is that stocks sold off so violently on the news. Just yesterday we were talking about the fact that the end of the rate hikes could signal trouble for both the dollar and stocks. It's hard for traders to break old habits.
Microsoft, Return of The Beast (GigaOm)
Have we already seen this point of the Microsoft cycle? Om Malik sees more than a similar plotline in the stories of Microsoft Vs. Google and Microsoft Vs. Netscape. During both battles, Microsoft stock had spectacular drops, as fear of defenestration really started sinking in. As the Softies will love to point out, Microsoft finally got it together and finally vanquished the enemy. But of course, the way to beat Netscape was to bundle their software and offer a competitor for free. How do you do that against Google? Search expert John Battelle also noted this in a blog entry entitled Google Worried? Yes.: One of the things that struck me the most about talking to all the folks at Google was this principle: the closer you got to the core, the more you heard the word "Microsoft." Eric Schmidt spent most of his career fighting (and losing to) Microsoft. Ram Shriram worked at Netscape, as did Omid Kordestani. John Doerr - enough said. The folks who are closest to Larry and Sergey are very, very worried about Microsoft, as well they should be.
Attitude, Finances May Have Hurt Lay (Washington Post)
Judging from the media reports on this trial, you'd think the chief questions facing the jury revolved around whether Ken Lay was good at keeping his cool during a trial. Also, apparently there's something about being an old rich guy that might get him into trouble. The papers don't seem interested in the key factual questions, and whether anything actually arises to a crime -- they're content with the fact (which they've convinced themselves a long time ago of) that he's a sleazeball and should probably be locked away. Ah, and here's another classic headline that gets at the heart of the trial: Lay defends lavish habits and big cash withdrawals


Car Industry Brings Back Incentives (WSJ)
The auto industry is back to its old addictions, namely, paying people to buy their cars. Despite the fact that interest rates are actually meaningful once again, they're bringing back the no-interest loans on many models. They're also offering free gas -- maybe because the auto industry is in bed with the oil companies they can get a discount on it that the customers can't get. To be fair, the move may be in keeping with lean manufacturing theory which encourages the companies to do anything possible to keep the factories humming, even during lean times. If this means taking a loss on each unit, then it's better than the costs of constantly shutting down and restarting the factory.
As Families Splurge, Chinese Savings Start to Take a Hit (WSJ)
Finally, economic salvation. Some Chinese are moving away from the boring save all you can lifestyle to the opulent, spend everything and then some like Americans do lifestyle. They've even adopted that quixotic "life is short" mentality to justify expensive purchases. Now, does this news actually bring anyone comfort? Does anyone think that global imbalances are somehow solved by the fact that the Chinese consumers are buying flat-screen TVs? It may be better for the Chinese that consumers start spending some money, but it doesn't make sense that this gives a green light to the US to keep spending and maxing.
Germans, Already Mad, Try to Get Even Over Gas Prices (NYT)
The energy conspiracy knows no borders. Like the multinational companies behind, it's beholden to no one flag and speaks no single language; instead it stealthily sneaks across the globe in the middle of the night trying to bilk everyone who needs energy to live. In Germany consumers are upset about the rising cost of natural gas (home heating). Despite the fact that base costs to the producers have risen sharply, some consumers are convinced that natural gas producers are jacking the price up unfairly. Many have stopped paying their bill "out of protest". Heh, some protest. Here our protesters take the day off of work, and risk losing their jobs. There, protesters get free gas.
Bulls Growing Hesitant (BusinessWeek)
Some technical analysis from S&P indicates that uncertainty reigns on Wall St. The bulls have grown hesitant as indications pile up that the next six months may not be as smooth as the last six months have been. Some of the reasons for the hesitancy may include -- wait for it -- bond yields, oil prices, and generic China prices.
Bolivia's military takes over gas fields (CNN Money)
Deal Goldman, how about orchestrating a merger between Venezuela and Bolivia. They just don't make sense anymore as standalone countries. Evo Morales really seems more like a COO than a CEO anyway. The synergies would be excellent, as they could expel oil companies with a single edict, instead of two. They could harmonize their currenecies, and become a single Latin American powerhouse. Does the UN have an FTC that would look at these things, or require a spinoff of some assets?
Finances of Social Security and Medicare Deteriorate (NYT)
Here's a big surprise, two enormous federal bureaucracies which are as theoretically sound as a Ponzi scheme are deteriorating financially. Actually, we're not really that surprised.
RIM faces new legal fight (National Post)
Fresh from its legal battles, which had everyone on Wall St. fearing that they would be stranded, Research in Motion is once again facing a patent lawsuit. This time it's with wireless email company Visto. By now you already know the drill, they claim infringement on some overly broad patent that the USPTO office has indicated probably shouldn't have been issued in the first place. But when one company has a bunch of cash and has shown in inclination to pay big settlements, then why not sue?

Related