Opening Bell: 9.19.06

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Retailers See Strong Sales for Holidays (NYT)
Chalk it up to season creep. We're barely out of Summer Driving Season, and we're already talking about Winter Shopping Season, the time when people of all faiths go deep in to debt to buy junk for their loved ones. The more cynical among us might even describe it as Economic Fallacy Season, as reporters buy hook, line, and sinker the idea that consumer spending is good for the economy. Never mind the fact that credit card debt only contributes to our savings problem. Never mind the fact that people don't get as much utility out of gifts as they get out of products they buy for themselves. And never mind the fact that the Holiday causes a major disruption to industrial output. And then there's all of the economic friction associated with temporary employment, parking, headaches, family fights, stores shutting down, etc. Still, do your part and help the needy... a needy retailer that is. Rumor is that Eddie Lampert wants a stake in the Gap. Help them out.
Fed Confusion on Policy Impact May Increase Dangers for Economy (Bloomberg)
Is it that outrageous, considering the impact that the Fed members have on our economy, that we expect them to be soothsaying oracles? It seems like a pretty reasonable request to us; if you're gonna make such important decisions, then get it together. But as we wait today, on Fed eve, it's apparent that not even the Fed itself knows what its thinking, or understands what's going on with the economy. It's nearly unanimous among economists that at tomorrow's meeting the Fed will keep rates steady, but as usual, it's all about the cryptic language that follows. And since many of the Fed governors are in disagreement about what's going on, or in what direction the Fed should take rates, expect some maddeningly deliberate obfuscatory language to happen. We'll be here to parse for your benefit.
Amaranth’s Loss Rattles Nerves, Not Markets (Dealbook)
There was a lot of talk about the big blowup yesterday, Amaranth's staggering losses due to natural gas bets made the wrong way. Comparisons to LTCM were made, and all of the financial news houses trotted out their old standby article examining whether a hedge fund collapse -- or many of them in succession -- could trigger any sort of confidence crisis or even meltdown of the global financial system. But all the chatter was just chatter; the markets didn't seem to notice. And it's not like Amaranth was small; it's losses were equal to those of LTCM! The biggest blow to the economy might be if the Amaranth loss induces further regulatory scrutiny of the industry.
Whole hog (Oligopoly Watch)
Unabashed agricultural commodity sluts that we are, we'd be remiss not to mention a significant merger in the pork products industry. This week, Smithfield Farms, the the #1 hog producer and #1 pork packer announced the buyout of Premium Standard Farms #2 hog producer and #6 pork packer. The move comes amid significant consolidation in the industry, and lets Smithfield play both sides of the pen, so to speak. It's now playing both the processing and supplier sides of the business, which increases both the risk and, naturally, the opportunity for upside.


Number of gay-friendly firms seen growing (Reuters)
Whenever some of our capitalism-skeptical friends question whether individual and minority rights would be safe if free enterprise were left unchecked by government, we often point out the alarming disparity in the treatment of gays by companies and states. Every election, more states make a point to ban gay marriage, just in case it were somehow legal all these years and nobody seem to notice. And every yeard, the number of major firms offering benefits to domestic partners and such rise rapidly. This year, 138 major US companies have received a perfect score (whatever that means) from the HRC, up from 101 last year. That's a pretty big increase; probably the same increase as the number of states that will pass some sort of anti-gay measure in November.
Motorola to buy Symbol Tech for $3.9B (CNNMoney)
As had been widely anticipated after yesterday's report in The Journal, Motorola announced its acquisition of Symbol Tech. Symbol is a leader in barcode scanning technology, and has also made major moves into related areas, such as RFID. Motorola has its own RFID interests, and it'll be interesting to see if they try to push the technology forward, possibly combining it in some way with its handset business. That could open up a new world of payment systems, and other consumer applications.
Princeton to Drop Early Admissions, Joining Harvard (WSJ)
For parents of potentially Princeton-bound high-schoolers, you may be happy to know that the university has dropped its early admissions program, just as Harvard did last week. That being said, there is some discussion (very small) that the universities could be engaging in monopolistic behavior by coordinating their admissions programs so openly. If the Airlines did this with prices, people would be all over them.
The Upride Ends: Now It Gets Interesting (San Diego Reader) (via Infectious Greed)
Housing, like any asset, is prone to gyrations in price and volume. It can move around, and shouldn't be a real big deal. And while the Barbara Corcorans of the world point out that real estate a) never really declines OR b) when it does decline it's not that big of a deal and it's just temporary, the nature of the current real estate market is arguably unique. It's not just that prices have risen, it's that real estate is an obsession. And it's not just housing, it's housing blogs, housing magazines, housing TV shows, housing stores, the lending industry, the lending to lenders industry, etc. So if everything really starts to unwind, it's not just consumers that won't be able to use their homes as ATMs, it's many other jobs and business that will go with it.
Conspiracy Theory (Environmental Economics)
As the price of oil surged unflinchingly higher in recent years, many people chalked it up to collusion among the oil companies. Now, as the price of oil is declining, many are taunting the conspiracy theorists... "Oh, are the oil companies conspiring to push down their profits?". Well, some think so. Putting our ear to the tracks, we've been hearing the ever-louder chorus of people who think it's all a ploy to make Republicans look better come the election, because if oil is at $2/barrel, people will be a lot happier with the current administration. You just can't beat the conspiracy theorists; god forbid oil shoots up again after the election.

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