Opening Bell: 10.9.06

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Dollar up on Korean won after North Korean test (MarketWatch)
As poor as our government's fiscal management is, there are some thing you can be pretty sure about when it comes to the US. We're not gonna have a coup, no matter how much people dislike the President. And Canada isn't going to test a nuke no matter how much they dislike the President. So as far as currency goes, you can cite all kinds of reasons why the Dollar is barely worth the paper it's printed on, but at the end of the day, when it's the Dollar against the Won or the Yuan, there's one that people want. And when you heard the news last night that North Korea had tested the bomb, was anyone else's first reaction something along the lines of "Wait, they hadn't done this before?".
French Premier Wants a Simpler Airbus Structure (WSJ)
For a while there were those on the American side of the aerospace battles that thought governmental support for Airbus was a violation of WTO rules, and that Boeing and the US government should press Europe about it. Now we know how unnecessary that would've been. Not only did any government support not help Airbus, but -- and this should be obvious by now -- the confusing, inefficient bureaucracy that is Airbus and EADS is an incredible disadvantage, and has made the company much less competitive. And if you're Boeing, you hope that nothing changes, that France and Germany keep the structure the same, keep helping it out, keep meddling in its affairs, and keep making politics part of the company. Unfortunately, some on the French side have stepped up to say that the structure must be changed, and that the goal should be to have a lean, efficient company, not necessarily one that served the interests of France and Germany equally.
Google Moves Closer to YouTube Deal (Dealbook)
So far, most of the rumors surrounding Google and YouTube have been vague, with arbitrary numbers like "40%" being tacked on. What the heck does that mean? But now things are getting a bit more substantive. The two parties are to have been in "marathon negotiations" over the weekend, with a possible announcement today. Both parties still need to bring the deal to their boards for final approval. Once the deal is shown to the board, it's safe to assume that directors will say "sure, what the hell, let's do it". We will add that if Google does end up paying billions for this profit-less company (we'll find out), that puts to rest any allusions to Warren Buffett like conservatism that the founders made. Rumor is that Berkshire Hathaway was only willing to pay $500 million for the company.

After Big Flops, Warner Hopes for 'Sleeper' Hit in Smaller Films (NYT)

After having a strong year last year, Warner Brothers Entertainment has had it rough in 2006, as it stands in sixth place among studios in terms of box office receipts. The company has financed a string of high-profile duds, such as Poseidon and Lady in the Water, as the year enters its final quarter, it's hoping that one of its low-budget flicks becomes a surprise hit -- a sleeper if you will. The article references the movie When Harry Met Sally, as an example of a movie with a quiet beginning (it raked in only $1.1 million in its first weekend) that eventually took off like crazy (pulled in over $90 million subsequently). It's getting harder and harder to get winners like that, since theatre owners are quick to pull movies if they're not performing well. The whole story backs up the cliche that in Hollywood, nobody knows anything. These guys thought Poseidon was going to be a big hit.


Thai Bonds Post Biggest Gains in Two Years After Coup (Bloomberg)
If only all coups were so good for the economy. The typical coup, or so it seems, is perpetrated by radicals on either the right or the left, promising to return power and to 'the people', but only after a few administrative things have worked out. Not the Thai coup. The country's bonds are rallying hard, as the markets anticipate more economic growth, and the resumption of stalled works projects. The new government may also have rate cuts as part of its agenda, which would increase demand for bonds. And this should be a lesson to central bankers everywhere. Raise rates, and you're liable to induce a coup.
Two BA execs quit amid fuel surcharge probe (Reuters UK)
So we kinda maybe talked about collusion. Two British Airways executive have resigned in the wake of an investigation looking into whether the company had conversations with other airlines about fuel surcharges. And they would've gotten away with it, except that Virgin Airlines ratted them out. Not really shocking, since Richard Branson will take shots at BA any chance he can get.
Gas tumbles, but don't get used to it (CNN)
In the past few weeks alone, gas prices have slid at the pump, on the order of $.15. And yet dark clouds loom on the horizon, according to the Lundberg survey, which is apparently an expert on these things. Some existing capacity is likely to be shuttered, as infrastructure moves to support home heating oil -- although this is in part due to reduced demand for driving in the middle of winter, so it's not clear that demand and supply won't remain at the same ratio it is now . Still, if it does move up, it will almost certainly be after the election, so as not hurt Dennis Hastert's chances at remaining Speaker. Other than the alleged conspiracy, that oil companies are deliberately dropping the price of gas to help their friend, George Bush, there's a new conspiracy making the rounds, that Saudi is trying to affect the market. Thankfully, economist James Hamilton deftly puts this rumor to rest as well.
Paulson Leads Drive to Ease Regulations of Sarbanes-Oxley Law (Bloomberg)
We've said before that the job of Treasury Secretary isn't all that clear, in terms of what the job description is. For the most part, it's seems like the secretary's job is to be the pundit-in-chief, speaking out about anything of concern, trying to get others to do something -- like trying to get China to adjust its currency. Now he's using the bully pulpit to lobby for changes to the Sarbanes-Oxley regulation, which his friends in the business will love him for.
US scoops Nobel economics prize (BBC)
If there were a Nobel prize for economics -- which there's not -- it would have been won by American Edmund S. Phelps whose work "deepened our understanding of the relation between short-run and long-run effects of economic policy". That's great. We're happy that an American won the prize, but the description of his work doesn't instantly give us chills or anything. If you're looking for an educated analysis of his work, and the importance of it, check out what Tyler Cowen has to say when he posts about it.

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