Opening Bell: 10.25.06

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Crude Oil Futures Rise for a Second Day on Colder U.S. Weather (Bloomberg)
We've heard from traders who trade heating oil futures that the price always jumps a little bit on the first day of snow. That may be apocryphal, for all we know (it'd be easy enough to go back and verify, with the data), but we suppose it could have some momentary and consistent psychological effect for one day. Apparently, energy prices also jump on the first day that you wonder if you should've warn a scarf. Maybe there are other one day events that people haven't realized yet. Does gold do well on the first sunny day of spring? Someone needs to start a hedge fund that just buys around these days, really leveraged of course, since the movements tend to be rather minimal.
Feds not expected to raise rates (AP)
At this point, a surprise rate hike, or even talk of a surprise rate hike would be a real suckerpunch to the market. And with the election coming up and all, the Fed will probably hold rates steady, using much the same language as last meeting (it seems to have worked). But that doesn't mean rate hikes aren't in the cards at some point. We can try wishing it away as much as we want, but there's enough of a lingering whiff of inflation to make your lunch taste weird. Last week, when the inflation indicators came out, steep declines in energy prices masked a core rate that was lurching forward.
Amazon Turns in a Smart Third Quarter (BusinessWeek)
It's been a rough quarter for many of the bellwether tech shares. And if there's one company that can always be counted on to disappoint shareholders, it's Amazon. But, lo and behold, it actually seems to have turned in solid results, at least the market thinks so judging by the 14% after-hours spike. The company report brisk summer sales, which it attributed to its fierce efforts to bring down prices and offer cheaper shipping. Analysts have always been leery about this strategy; "they're selling $1.00 for $.99", has been a commonly heard refrain about the company. At least for the moment, it's earned a reprieve from the sniping.
GM Net Loss Shrinks, Operating Profit Tops Forecasts (Bloomberg)
This year has seen a dramatic reversal of fortune between Ford and GM, at least in the eyes of the market. Earlier this week, we were treated to Ford's mounting losses and restatement warnings, while today, GM comes through with what appear to be tolerably poor numbers. It helps to have lowered expectations. The company benefited by plant closures, worker buyouts, and reduced healthcare costs. One thing the company hasn't done is boost sales, which is ultimately what it will take to turn things around. As long as Toyota keeps gobbling into the company's market share, it's not going to be able to get out of its decline. Initial moves on this front haven't been particularly inspired; the best thing that can be said is that it redesigned its Saturn Sky roadster. Ok, that's a start.


Fugitive millionaire seeks US extradition papers (SABC News)
Just to be clear, Kobi, the US government really wants you back. There's not much ambiguity about it, and once you pore through the documents, you're going to realize that. See, Kobi Alexander (now based in Namibia, as well you know) has requested the US extradition documents for him and his lawyer to go through. It sounds like they're looking for a loophole, or that they're trying to see if the request will expire at some point, allowing Kobi to wait it out. At this point, we're almost rooting for ya. What would be great is if while in Namibia, Kobi founded a new tech startup that revolutionized the industry. Who would have the guts to go after him at that point?
BT buys U.S. anti-hacking specialist (Reuters)
If you've ever heard of someone in the field of computer security, it's Bruce Schneier. His name was mentioned in the Da Vinci code, which just about takes care of all of you, except the most radical cultural contrarians. He's done important work in developing encryption systems, but now is most well-known for his frequent rants against most governmental anti-terrorism measures, which he calls "security theater". You can read more of his stuff at his blog. Today it was announced that his firm, Counterpane Security sold out to British Telecom. Congratulations to him. As for BT, it's been doing a fare bit in the computer security space recently. It recently announced plans to do better monitoring of its network, and like other communications operators, it would like to offer security services to its clients to rake in more premium rates.
A Cappuccino With the 2x4’s? (NYT)
In place of the New York Times' daily Wal-Mart story (anyone else noticed that?), the paper's running a story about another big-boxer, Home Depot. That's fine, we were ready for a switch. Home Depot, along with every other major retailer, has managed to avoid the political wrath that's been heaped upon Wal-Mart so the article actually focuses on business. There's been a lot of well-placed worry that a housing slowdown would hurt Home Depot's core business of selling stuff for houses. So the company is taking aggressive measures to juice its stores, for the first time straying away from its core offerings. At some trial locations, it will begin selling gas, cigarettes, and even industrial-sized portions of coffee for a contractor to take onto the job. It's also taking the counter-cyclical measure of upping its staff, which is the opposite of what competitor Lowe's is doing right now. Even if housing really goes into the tank, the psychic joy of actually building something real will keep a lot of people coming to its stores. And, if you work in some hip Manhattan design office, it'd be tres chic to pick up some Home Depot coffee and bring it to work.
Bearish Bets On the Nasdaq Reach a Record (WSJ)
In one of the clearest, cut-and-dry cases for contrarian thinking, we know that when everyone's betting against a stock or an index, by going short, said index tends to rise. And as the daily march northward continues, it's no surprise to find out that short interest is extremely high, at record levels on the Nasdaq. Every time the market ticks up, some more people are forced to liquidate, and magically those short sales get converted into buys. Unfortunately though, you can't run on short fuel forever. And despite the recent losses, there are still plenty of shorts who are sure they're on the right side of the market.
ImClone Appoints Icahn Chairman; Interim CEO Joseph Fischer Resigns (WSJ)
After a hard battle to wrest away control of the company, Carl Icahn has a new job. This morning it was announced that he's been named the Chairman of Imclone, while the interim CEO Joseph Fischer, who Icahn said didn't have enough biotech experience to be a full-time CEO, has resigned. It's good to see Icahn get his way for one, otherwise he might get discouraged.
When Jobs Are Bountiful and Pay Isn’t (NYT)
Discussions about the minimum wage feel like really tired ground. When the Times starts the discussion, it feels like they're beating a dead horse. It seems the entire Times business section is obsessed with a few questions like the minimum wage, CEO pay, and the gap between the rich and the poor. Are these questions really so timely and critical that they dominate almost all other coverage? The latest piece starts out promising enough, noting that any program which makes hiring more expensive (Social Security and Medicare are mentioned) hurts employment. Interesting. But it then says that society has other concerns besides just sheer number of jobs, and that the minimum wage hardly effects anything. What's strange is the idea that raising the minimum wage is a matter of populist concern. Polls say that people want it higher, but so few people actually make the minimum wage, so these people would probably say in the same poll that during the winter months they'd like the sun to be warmer.

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