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Opening Bell: 10.19.06

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Consumer Price Index Declines (Reuters)
Yesterday we had the PPI numbers, which looked pretty good, except that when you factored out the big declines in energy, the core actually rose. Still, the bulls, who were so eager to strip out food and energy on the way up, decided to look at the headline number. On TV yesterday, all the pundits kept repeating the phrase "benign inflation", whereas others who looked more closely at the numbers called it inflationpalooza. It's the same today with the CPI. Consumer prices dropped .5% in September, but the core rate limped upwards by .2%. Interpret the number as you will... hypocrites.
County Social Security checks to increase $25.60 (El Paso Times)
Meanwhile, how messed up is it that some people must really be rooting for the cost of living to go up? Those people? Those who's Social Security checks are indexed to it. Though some are saying the latest jump isn't enough, and that they want a bigger raise. Still, it's not all good news for pension-dependent retirees. As part of Medicare's plan B, they're obligated to pay $10 more per month this year, eating away much of their Social Security gains.
Citigroup's Net Income Falls 23% (WSJ)
Don't let the headline confuse you. This is American finance; income doesn't fall. It only drops when the previous quarter had a one time gain. Last year, the company sold its insurance and annuities business to MetLife, which is why it looks like this quarter was so weak. And in some way, there were some spots. The company expressed disappointment in its capital markets business, which was offset by strong gains internationally. The funny thing about Citigroup is that a big part of their business remains rather tangible and pedestrian, that being all of the branch offices for Citibank around the world. It's still expanding that network, even in the US, though the company says the consumer is being a jerk, and not helping results that much.
S&P, Fitch Cut Italy's Rating on `Deteriorating' Debt, Deficit (Bloomberg)
Anyone who talks about the Euro one day supplanting the Dollar as the world's reserve currency has to address the thorny problem of the Eurozone itself. Namely, it's sort of a mess. It's not that any of the economies are so bad. Notice, we said, economies, not economy; the single unified currency of the land hasn't translated into a single, unified economy. Some are weak, and need monetary stimulus. Some are strong and need cooling. Some, like Italy, have such bad government finances that the credit ratings agencies are warning about its debt. What happens to the Euro if Italy goes bankrupt? It can't be good.

HP knocks Dell off PC pedestal without trying (The Register)
Amidst all of the nonsense at the upper levels of HP, the company does appear to be performing quite solidly. For the first time, since right after it bought out Compaq, HP has reclaimed its spot as the market share leader in PC shipments, surpassing Dell. The company slung 9.7 million grey boxes, compared to 9.5 at Dell. Meanwhile, Apple continues to make demonstrable gains in the computer business, which is only the latest humiliation for Dell, since the company's founder once implored apple to "liquidate and give the money back to shareholders".
Apple net income soars 27% (CNNMoney)
As you may know by now, Apple reported blowout earnings after the bell last night, sending shares higher in after hours trading. Hats off to them. But really, isn't it just a matter of time before Apple gets lame. Ok, the iPod is nice, but everybody has one, and wearing one on the subway looks tremendously uncool. Computers, again, doing good. But it's almost too much to bear, all the glowing Apples every time you walk into a coffee shop. On the other hand, Apple's computer sales really have benefited from the web. It just doesn't matter that their OS is still piddly compared to Windows, or that there's not as much software for it. Everything we do is online, basically, and for that it works just fine.
Say goodbye, Terry: Is Yahoo tired of its chief? (Valleywag)
There's a meme going around that Terry Semel's days as the chief at Yahoo are numbered. Actually, it may have been started by Henry Blodget, though he's probably not the first to have thrown the idea out there. After all, if you've read anything about Yahoo recently, even before its disappointing earnings, and in ignorance of its cheap stock price, you know the company doesn't really have much of a coherent strategy. Word is that Semel isn't much of a risk taker, and that there isn't much drive at the company these days. Who knows, perhaps Yahoo could even be on the block. That rumor's been floated a bunch before, but it's looking more and more possible each day, as its market cap continues to slide.
Not so down and out (Economist) (via Asymmetrical Information)
On a busy street near Opening Bell HQ, last year, we were watching consumers line up outside of a place that offered cheap bankruptcy filings. This was just a few days before the new laws, limiting the ease of filing, were to go into place. It certainly seemed like a bad sign that so many were eager to file. Well, they all got it out of the way, it seems like. According to the Economist, the number of filers has dramatically plunged since the law was enacted. There's some question as to whether this is a good thing. Maybe everyone really did need to file, or maybe some of them could have taken some counseling and restructured their debt. But it's really not that much harder these days. There's some added legal costs, more papers, stuff like that. But if you really want to expunge your debts in one fell swoop, it's still the only game in town. So, here's to cautious optimism that it may be working.
Ryanair won't raise takeover bid for Aer Lingus (AP)
It doesn't look like Ryan Air is going to be buying out Aer Lingus anytime soon. The company doesn't want to sell, the regulatory hurdles are large, nobody likes the deal, and Ryan Air isn't willing to raise its bid. To win, Ryan Air has to keep acquiring shares of Aer Lingus on the open market, but law prevents them from doing so at the existing price. And with no management of Aer Lingus on board to rally the shareholders around a sale, it looks like a non starter.
Is Risk related to Return? Why not? (Mahalanobis)
If you're a financial engineer, and you really want to mess with your mind this morning, there's a new paper out suggesting that risk is uncorrelated with return. Best read while tripping or stoned.