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SEC Officials to Defend Decisions In Insider-Trading Probe of Pequot (WSJ)
The Pequot capital (non) scandal is beginning to feel a bit like a hangnail. Every time we think it's over, or that we've got it, and then something else comes out and it hangs around just a little bit longer. The Senate Judiciary Committee (hmm, sorta busy these days under Pat Leahy...) will hear testimony from SEC Enforcement Director Linda Thomsen, arguing that the matter was settled properly, and that staff attorney Gary Aguirre was not fired for his interest in investigating John Mack. The SEC seems to pound away at the nuts or sluts line of defense against Aguirre, point out how erratic his behavior was, and that he didn't get along well with others.
Hedge Funds to Face More Scrutiny From U.S. Market Regulators (Bloomberg)
Here's the thing with increased hedge fund regulation: you know it's going to happen sooner or later. It's just a matter of when and how much, not a matter of if. As long as there's a prominent area of business, and it's prominently "under regulated" compared to its peers in finance, there will be calls for regulation up until the day that they're actually in place. Now the Senate Judiciary is set to take up the issue. The justification for the increased scrutiny seems to be based on the commanding heights view of the economy, that is the more important an area is, the more important it is to regulate it. Of course, you could make a good argument the other way, that the more important an industry is, the more dangerous it is to regulate it. The Senate Judiciary committee will probably start small, looking at something like insider trading to see how the SEC can better monitor it.
Woolworths shares dive on Christmas warning (Reuters)
It's not just retail shoppers on this side of the Atlantic that can't get real excited about yet another Christmas, the heathens in Old Europe are causing consternation for retailers there. Woolworths warned on sales, while Tesco remained cautiously optimistic, after turning in some disappointing numbers. We blame the war on Christmas.
Nobel Peace Prize winner itching for a fight (Fortune)
The Opening Bell has remained a bit more sympathetic to Muhammad Yunus than has the rest of the The 'Breaker, but eventually our sympathies start to erode a little. The Nobel Laureate has gone on the attack against the Norwegian-based Telenor, the telecom company that helped the Gremeen Bank set up Grameen Phone, the largest mobile phone operator in Bangladesh. He says that Telenor promised to give Grameen complete control of the company, and that with the profits flowing from Bangladesh to Norway, the company is practically stealing from the poor. We smell a rat. Now, they may have had some agreement, and if so, then obviously we think Telenor should honor it. But the idea that if a foreign company refuses to keep their profits from an operation within the country of operation, then they're practically stealing, is a bad argument to make. You could easily see that turning into anti-trade protectionism very quickly.
Nuclear Power Revival Could Encounter Hurdles (WSJ)
It's one of those weird laws of economics. When the price of one good goes up, the price of its substitute follows it along. It sort of makes the idea of switching from one fuel to another, in a bid to save energy, sound a little silly. One day, the hair of corn really will be as valuable as gold if we were to switch to ethanol-based cars. No more cornbread, that's for sure. Just not worth it. There's been a lot of talk about nuclear energy, as a way of weaning ourselves of foreign oil, and preventing climate change. But the problem, well, uranium isn't so cheap anymore, and not particularly abundant. Price of the atomic stuff is up by 800% since 2001.
Toll Brothers sees next year's profit down up to 62% (Markewatch)
Toll Brothers, the luxury home builder, has been getting absolutely shellacked lately. The company's announced shocking profit warnings, and says next year's earnings will be down another 62%. This is due to a record number of cancellations, and it's a reminder that backlog means nothing when it comes to homes, or many goods. So don't use backlog numbers when you're putting together a revenue model, or at least put the backlog number in scare quotes, just to remind you. The good news? The company sees the end of the decline in sight.
A Soda Maker, Touting Health, Moves to Sugar (WSJ)
The relative health of effects of high-fructose corn syrup, compared to plain old white sugar, continues to be a debated question. Some argue that the stuff is clearly worse for you, making the subsidy of corn, and the tariffs on sugar, all the more perverse. But both are really bad for you. Poisonous really. But it's interesting that Jones Soda (that plucky soda company with the weird flavors) is switching to sugar. Even if it's not better for you -- and we'll take the stand that it's not -- it does taste better, a la Mexican Coke, which tastes like 5 times better than the American version of the "real" thing.
Ford to sell climate unit (Tribune)
When we first saw the headline, that Ford was getting out of the climate business, our first that was that it was dumping its automobile business, due to the fact that that they contribute to climate change. That would've been extreme. No, in fact that company is selling its small climate control unit to French firm Valeo SA, contingent of course on coming to a deal with the union.