Opening Bell: 7.18.06

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YUKOS argues UK criminal law applies to Rosneft IPO (Reuters)
You have to understand Yukos' frustration. It had its cherry assets stripped by the the government only to see a lot of western businesses turn a blind eye as those assets come to market with the Rosneft IPO. So far no regulators have had the guts to stop Rosneft from raising money, despite the fact that all this is right out in the open. So Yukos, which would love its energy back one day, is turning to the London government to block the sale. Still, you have to love Rosneft which doesn't seem to deny the theft, but that it was an act of state, which doesn't fall under any the relevant British law.
Paris, We Have A Problem (Forbes)
Jerry Flint, at Forbes, has a nice piece explaining why Wall St. clap-trap about GM is just that. There are frequent calls among analysts and pundit to streamline GM by reducing some of its brands, but those calls are made by people who don't understand the costs in doing this. They think the remaining GM brands will just fill the gap, and that the dealers will quickly adjust. This didn't even work out well when eliminating the lowly Oldsmobile. As for partnering with Nissan, the problems are similar. how does on actually integrate two car companies? you can't just put the Nissan name on GM products, the way you could do with Compaq and HP. So at the moment, the companies are done talking, and are now in the thinking point of the negotiations. Meanwhile, GM sales are down 12% in North America.
US charges online gaming chief (The Independent)
More details are emerging about the arrest of David Carruthers, the CEO of online gambling firm BETonSPORTS. It seems like whatever reputation Americans have for being Puritan pricks is being well backed up by the Attorneys in this case who want to jail everyone involved, and are hoping to get BETonSPORTS, which is perfectly legal in its home country to forfeit $4.5 billion in assets. You'd think they'd sold drugs, or engaged in some equivalently coercive crime. As part of the sting operation, undercover agents set up anonymous accounts and placed bets. This is undoubtedly going to be a huge legal fiasco, and it could prompt intergovernmental strain.
Cartel to Competition (TCS Daily)
For the most part, in this country, the free market is seen as a pretty good system when it comes to most things. But for some reason, when it comes to really big areas, it's like the government gets cold feet, and wants to regulate to the hilt. Healthcare comes to mind. In other area, in which the government has preferred monopoly is in the area of bond rating, and so the government has kept in place the duopoly of S&P and Moody's. But these wide-moat classics, may see the enemies banging at the gates soon. The house has taken the first step to loosening the duopoly, as last week it passed the "The Credit Rating Agency Duopoly Relief Act". Unfortunately, we don't expect politicians to be using that one in their campaign commercials too much.


Lower stock start looms (CNNMoney)
This is just a service note to corporate boards. Stocks are expected to open lower today, so be very careful about granting any stock options today. 6 years down the road, some may accuse you of exploiting the violence in the Middle East to line the pockets of the CEO at these "low" stock prices. Generally speaking, it seems like a bad idea to grant stock options at all, since they all seem likely to raise suspicions. What if you your company gets some unexpectedly good news soon? What if it doesn't? Seems like too much of a risk. If you want to pay the CEO, let's keep it to cold cash, straight from the shareholders.
Dr. Z Steps In Where Iacocca Once Trod (NYT)
We've been watching the Daimler ads on TV featuring the company's mustachioed CEO Dieter Zetsche. We must admit that every time they come on, the only thing that crosses our mind is "hmm, are we in the 1% of the country that could positively identify Dieter Zetsche, or is it more like 5%?" They're pretty good ads too as the CEO pulls off that whole German awkward, reserved and efficient thing pretty good. Still, they probably don't hit the viewer in the gut the way Iacocca could. And they till trot him out every once in a while, like he's a good luck charm or something. With any luck, they'll expand the "Dr. Z" campaign, and have him do more, though we imagine he's pretty busy.
A Windfall From Shifts to Medicare (NYT)
This is going to be a pretty awkward moment for some out there. Analysts expect the pharmaceutical companies to start taking advantage of a new phase in the Medicare law that will bring poor people into the fold. In other words, in our bid to help out the poor with the cost of medicine, we're transferring yet more billions in taxpayer dollars to the pharmaceutical companies. It's surprising the critics of big pharma aren't all over this with calls for Medicare to only buy drugs from online Canadian pharmacies, or if need be, reputable ones. Or, instead of Medicare being a taxpayer-funded entitlement, perhaps the pharmaceutical companies should just provide free drugs to do their part. Either way, yet another transfer to the pharmaceutical companies, in the guise of "helping people" just seems a little too slick.
NYT to cut paper size and close plant (Reuters)
The beloved New York Times will no longer be quite so difficult to read on the subway, as the company will trim the size of the paper by just over an inch. In a move to reduce overall size, as well as paper costs (which have been sky high along with every commodity), it will make the move, which many other papers have done in recent years. Could the Times' deigning to reduce the size of its sheets be a sign of a top in paper prices? We've had too many of these ultimate contrarian indicators to count, so no need to start now. For our perspective, why not just make it a full-on tabloid? Or is that just too much of a white flag?
China's Economy Soars 11.3%; More Fiscal Restraint Expected (WSJ)
As for the Chinese economy slowing down, eh, not so much. The economy is like a prize fighter, or a sprinter, knocking out double digits with ease and regulatory, putting the fear of god into central bankers, who huddle in fear about pansy stuff like inflation and "overheating". Get over it.
L.A. Law Firm Pleads Not Guilty to Charges (AP)
As expected, the law firm Milberg Weiss pleaded not guilty to charges that it offered kickbacks to get lead defendants to participate in class action suits. That had to be a tough moment for the firm to coordinate, as it had to get every practicing lawyer to say "not guilt" on the count of three. It must've been an unusual moment for all of them. This is the most high profile corporate indictment since that of Arther Andersen, which led to the breakup of the company, though it was overturned on appeal by the Supreme Court. Still, one can't have too much sympathy for Millberg, which is one of the most prolific and nasty class-action firms.

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