Opening Bell: 7.14.06

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Oil Prices Hover Above $78 Per Barrel (Washington Post)
Well, it looks like 80 is in the bag, right? The fighting in Lebanon, which is basically a war -- rockets being fired from both sides -- is now the #1 geo-political concern on the minds of oil traders. At this point, no one incident is the perfect storm that will send oil to $100. North Korea has fired of missiles, but doesn't own any oil. Iran has lots of oil, but hasn't launched any missiles yet. And in this situation, the two sides have been fighting, and are very close to oil-producing countries, but neither side has any. The fear, naturally, is that there could be spillover, that an oil-producing state might join in the battle somehow, probably against Israel -- or at least shut down production for a while for political reasons. So hopefully they'll get this all wrapped up soon, because we still have a month and a half of the "Summer Driving Season".
Yen Drops as Bank of Japan Says It Will Keep Rates `Very Low' (Bloomberg) After the BOJ's first interest rate in years, it appears it came down with cold feet, now saying that interest rates will remain very low and that there's no guarantee that there'll be more. The Yen, which had been climbing in anticipation of a tightening cycle, has dropped again. Hey, there's always next time.
Jurors Rule for Merck in N.J. Vioxx Case (AP)
And score one for Merck. Get this an elderly woman, with a history of heart disease, high blood pressure, and clogged arteries couldn't convince a jury that she wouldn't have had a heart attack if she hadn't taken Vioxx. The jury must've been particularly alert to get this one right. The way things go, she was probably at a disadvantage having survived the heart attack. Since the fundamental challenge for the plaintiff is to make the jury feel as sad and angry as possible, a lone widower might've stood a better chance.
Lawsuit to allege chip price fixed (CNN)
For some odd reason, the ongoing legal battles relating to an alleged 2002 DRAM price-fixing scheme hasn't got the same media attention as the above situation with Vioxx. Very odd. Still, the issue is no less nonsensical. A handful of Korean chipmakers have already plead guilty, with some executives going to U.S. federal prison, for conspiring to fix the price of DRAM, to the detriment of US buyers, such as Dell or Apple. Perhaps the broke the law in coordinating their prices, but it should be noted that unsurprisingly, in the hyper-commoditized DRAM market, most of the companies still lost money during the scheme. And in classic American justice, settling with the Feds turned out to be the beginning not the end. Both California and New York have filed separate lawsuits against those companies, so they can get a cut. When will Spitzer just get elected governor already?


Mittal, Arcelor Now Won, Targets China, $8.7 Billion India Mill (Bloomberg)
So now that Arcelor is in Mittal's bag (or soon to be), what's their expansion strategy likely to look like? It appears that -- as with every other multinational these days -- the company is aggressively going to expand into India and China. But this carries more risk than when, say, IBM does the same. It's one thing to set up shop in an industrial park. It's another thing to build steel mills, figure out how to acquire the necessary ore, and compete with other regional companies with quite a bit of expertise. The battle to acquire Arcelor probably won't hold a candle to this stage in its history.
GM 'does not need carmaking partner to survive' (Times Online)
It sounds like Rick Wagoner is trying to sounds like one of those "cool guys" as he heads into talks with Carlos Ghosn. From his point of view, GM don't need no help from nobody, and that everyone should just be mindin' they own business. That being said, he is willing to explore the situation, which he'll take or leave, no biggie either way. He insists that GM already has a recovery plan, though he didn't say what it is, and nobody seems to know anything about it yet. It may involve the use of accounting tricks to create phantom profits. That may work while you're down and out, but as soon as you're no longer a sob story, the SEC's gonna get curious.
Hertz's Owners Take Final Steps To Launch IPO
Hertz is gearing up for its IPO, just 6 1/2 months since the company was acquired by private equity. That's really quick. Can private equity firms really make lemonade in that short of time? We'll know once Hertz is up and running. If not, then the maybe (just maybe) private equity is a bit of racket, and should instead be the name of a brand of wine or gin. But if so, then it's a great vindication for the pay and the level of talent that's been pouring into this area, and all credit is due to them.
Tobacco May Be Partying Too Soon (BusinessWeek)
First of all, BusinessWeek, it's never too soon for tobacco to party, it's been partying long before you existed. As for the ongoing lawsuits against the tobacco companies, yeah maybe you're right that their legal woes aren't over. It's true the big Florida case is over, but there's still thousands of individual cases against Big Tobacco that could still cost the industry hundreds of millions. And then there's the world scene. A lot of Asian and European countries are still in their "smoking is cool" phase (we're in it here too, but several iterations and waves later), and when they go into their "smoking is for losers" phase, they're going to want some cash. So, take a drag now, but keep some on hand for some tense days ahead.

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