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Opening Bell: 8.16.06

The Stock Market Likes Military Kills, not Political Ones (The Alpha and Omega)
Given the tumult in the Middle East, it seems important to get a handle on how the market is likely to react to various events. So, for example, on Monday, after the cease fire was announced, we saw a sharp rally that eventually fizzled. A 2005 paper also sheds some light on the question of assassinations. Turns out that if a political leader were to be assassinated, it wouldn't do much for the market. But a military leader, well that's a different story. The markets move higher on news that a military leader has been taken out. And since all war is fought strictly for the purpose of US business interests, we can expect US military strategy to revolve around this simple observation.

FBI seeks help finding former Comverse CEO (CNNMoney)

The FBI really wants to find former Comverse CEO Jacobi Alexander, and they're not kidding around. Word is that "Kobi" has hightailed it to Israel after bank records indicate that the guy transferred a cool $57 million to an Israeli account. Still, being on the lam and having $57 million has to feel a bit like the dehydrated pirate on the ocean. Yeah, there's plenty of money, but what the hell do you do with it? Buy a house? Probably he wants to lay low. Certainly he won't be bidding on art any time soon. Once he realizes this, he'll probably wish he transferred something on the order of $1 million, an amount that's a little less suspicious.
New York Times Hires Talent Agency Owned By ICM (PaidContent)
The New York Times probably has more stories than any other paper that could eventually get turned into movies. And it's not just their gripping first person accounts among refugees, or journeys into the FARC-controlled regions of Colombia. A few years ago, the newspaper had this ridiculous 'style' piece about the so-called "man date" (two straight men hanging out, going to dinner. Yeah, pretty crazy!). Even that got optioned into a movie. So, the paper of record has officially hired a Hollywood talent agency to represent itself in negotiations to turn articles into movies. So this is the newspaper in the age of digital media. Somewhere, some Columbia journalism prof is penning an article on all the negative implications of this.
Yo! Smirnoff Raps for Malt Beverage (WSJ)
Let's get the main story out of the way first. Smirnoff is creating some waaacky advertising for its new malt beverage, and their aim is to make it go viral on YouTube. And now that you got that part, it's becoming increasingly obvious that the advertising sections of the Journal and the Times have become totally lazy. Basically, it's "what ad (or mock ad) is hot on YouTube today?". In fact, it's not just the advertising sections. The YouTube article has replaced the blog article as the print media obsession du jour. Last year (though even more in 2004), all we heard about was how blogs were talking about this or that. Thang god that ended. But now it's YouTube. YouTube is used for viral marketing. Kids are making their own trailers for Snakes on a Plane and are putting them on YouTube. Who will buy YouTube? What's their business model? Lebanese civilians are taking videos of the bombing and putting them on YouTube. Ok, enough already. Time to move on.

Teck fattens bid for Inco (National Post)
Miner Teck Cominco has once again upped its offer for Inco, saying it will pay $20 billion for the company, and that this was its "final" offer. Already, shares of Inco have risen above this level, anticipating yet another bid from either PhelpsDodge or Brazil's Companhia Vale do Rio Doce. In fact, Phelps' offer is already slight ahead of Teck's, though Teck's offer is comprised, to a much greater degree, in cash. Analysts think that Vale is inclined, and has the money to trump Teck's offer. Awesome.
Judge Rules for Insurers in Katrina (NYT)
Private insurance companies don't typically cover flooding, which probably has something to do with competition from the monopolist, FEMA, which does sell it. And since FEMA's sale of it is really just a subsidy to people who live in flood-prone regions, you can understand why there's really no private market for these policies. And if an insurance company doesn't cover a certain kind of damage, it does seem only fair that they wouldn't be expected to pay for such damage. Fortunately, for them, a judge ruled that insurance companies operating in the gulf coast region were not responsible for flood damage in people homes -- again, because those policies didn't cover flood damage. Seems odd this ever went to court, but then again, it's not that surprising.
The Guard Dog Ate My Matisse (WSJ)
Hedge funds, as you know, have been getting into the art game, buying up pieces at auction in anticipation of price gains in the future. But we already knew that hedge funds were sexy. Now the dowdier folks of finance are looking to cash in as well. Insurance companies are pushing art collectors to purchase more coverage for their valuable pieces. They say that claims are way up, and the reasoning is classic. As art events go from being sophisticated genteel affairs, to basically 'free booze at the museum', damage to works is increasing. Clearly, It's not hard to imagine a drunk Nicole Richie tripping over herself, and taking a few million in paint down with it.
Delphi has $2.6-billion loss (Detroit Free Press)
Bankrupt auto parts maker Delphi shed another $2.6 billion in the first half, as it spent a lot of money convincing employees to leave. The company did have reason to cheer though, sales rose by 1% during the same period. We have just the prescription for the company. For a long time it's been obvious the company would have really good synergies with software maker Oracle. Then they could change their name to 'Oracle (at) Delphi', which would be fantastic. Actually, go to the websites of Oracle and Delphi. Their corporate font is already very similar, which suggests this deal is a matter of fate.
Teen Retailers Show Strong 2Q Growth (AP)
Somebody forgot to tell teenagers that consumer was spending was set to slow. Either that or someone forgot to tell them to wake up already and find a new style. Well whatever the reasons, retailers like Abercrombie & Fitch and American Eagle (for the kid who doesn't have the guts to rock the A&F) are still booming after all these years. Amercrombie's profits were up 14% in the last quarter, while American Eagle's surged 24%. Abercrombie says it was helped by its Hollister line of surf-inspired wear. Oh, and can we end this on a tenuous Jeffrey Epstein note. Didn't we read that one of his clients was the Wexner family? Yes, that's Les Wexner who at one point owned and then spun off A&F.