Opening Bell: 1.23.07

Author:
Updated:
Original:

Tate & Lyle Shares Slump as Profit to Miss Target (Bloomberg)
Is the Splenda age starting to wane? Shares of Tate & Lyle slumped badly after the company warned that sales of the sucralose-based (100x sweeter than sucrose!) artificial sweetener, Splenda, would grow only modestly. This is a far cry from a couple years ago, when there was a bona fide shortage of the stuff, as lusty diners would pack the yellow packets away in their purse for use in future drinks. Also, there's an interesting lesson here. Tate & Lyle only invented Splenda after the EU pared back sugar subsidies, and damaged its business. Seems like a good case for reducing subsidies, no?
Gas Station To Offer 'Terror-Free' Oil (Newsnet5.com)
For the economics impaired, you now have a way to fill up your SUV sans-guilt. There's an increasing trend of gas stations offering 'terror-free' fill ups -- basically, gasoline that was imported from a country that's not a sponsor of terror. As some are noting, this sounds a little bit like eco-labeling, such as the practice of putting "dolphin-free" on a can of Tuna. Actually, it's much stupider, since most oil producing states don't care who they sell to. So if you buy good ol' Texas gasoline, then Iran will just sell somewhere else -- and if you bid the price of Texas gas higher, then ultimately it will push the price of Persian gas up as well.
Illinois Is Putting Lottery on Block for Quick Payoff (NYT)
The morality and legality of gambling really comes down to who is playing house. If it's some Gibraltar-based online casino then it's a scourge that's ruining families and is practically in the same business as the mob. If it's a public institution, then, well, all bets are off. Certainly, the state of Illinois has no problem collecting a $10 billion windfall from gambling, as it's set to sell its lottery -- the whole damn thing, monopoly and all -- to a private buyer. The state has partnered with UBS for the deal, although UBS should be worried that one day even lotteries will be illegal, and they'll be investigating companies that were involved with the industry back when it was legal.
Oil bounces above $53 (CNNMoney)
It snowed in New York yesterday. Not a whole lot, but there was a short period when some big fat flakes came down and it must've reminded traders that the winter is far from over. It was pretty depressing actually, and it sent oil back to $53.


More Gambling Subpoenas -- This Time, the Investment Bankers (The Conglomerate)
Yesterday's news that the US government would be subpoenaing investment banks raises some pretty serious legal issues, that Christine Hurt over at the Conglomerate lays out pretty well. For example, she asks, can a Texan be arrested in Texas -- where gambling is illegal -- for owning shares in a Nevada-based Casino? Or can a resident of Nevada be arrested while traveling in Texas? Or, can a casino executive be arrested for advertising in a state where gambling isn't allowed. In other words, when the hell did it become legitimate to arrest people for actions they took that were legal in the place they did them?
Springtime for Ethanol (NYT)
Despite some significant doubts about the underlying economics, it would appear that the ethanol lobby has won. At his State of the Union, President Bush is expected to make the stuff, once again, the centerpiece of his economic policy. It would appear it's no longer a question of "if", but of "when" and "how much" ethanol. Of course, there's a problem for the industry that it needs to solve. For a long time, the chief exponents of it were Iowa corn farmers, eager to find another federal subsidy for the yellow stuff. But, corn really isn't the best ethanol crop, and there are better, non-food crops to do the jobs. perhaps the ethanol lobby will cleave along these lines, with the corn growers demanding a large cut of ethanol lucre, just because they've been fighting the good fight for so long.
GE goes wild (Oligopoly Watch)
It's probably not as titillating as a tape of Girls Gone Wild, but GE Goes Wild will have to do today. After a couple of years of sitting on its cash, GE is strong out of the gate in 2007, making a spate of pricey acquisitions. Already it's spent over $15 billion making buys in medical equipment (Abbot's diagnostic unit), aerospace (buying the unit of Smiths industries) and drilling equipment (Vetco Gray). In otherwords, the company is buying the equipment to make stuff, and is less interested in the made stuff itself -- hence the sale of its plastics business.
Steve’s Case for a Health Revolution (GigaOM)
This has been talked about for awhile, but former AOL chief Steve Case is hard at work on doing for the healthcare industry what he did for the internet, that is making it accessible to the people. His new company Revolution Health, which has been in the works for a couple of years has all kinds of ideas about how it's going to simplify and reduce the costs of healthcare. Now compare that to Gerald Levin, who's post Time Warner mid-life crisis pushed him to embrace new age philosophy, and some attendant personal wellbeing nonsense. If you don't think it's nonsense, you may soon be able to go to one of his Moonview Sanctuaries, that he may open up in New York.
Bank of America Net Rises on Credit Cards, Investment Banking (Bloomberg)
Bank of America is clocking in with strong results, boosted by its purchase of MBNA, and that little industry known as investment banking, which everyone seems to be making a lot of money with these days. Profit at that division actually grew at a paltry 23% clip, helped in large part by big growth at its bond underwriting unit.
Sell Tech Based on the Calendar? It Depends on Your Horizon (Ticker Sense)
So Cramer's been yelling at you to sell your tech. Sure it's been going down a little bit, but you can't help but find all this calendar-based trading to be a little bit of mumbo jumbo. And if anything, there's probably a lot of money to be made in doing the opposite of the Cramer crowd, wouldn't you think? And, besides, you think that Cramer might not be so much predicting the sell off, but causing the sell off. Either way, Ticker Sense has a calendar-adjusted chart of tech and finds that in recent years, Cramer's calendar theories are right, and that now is a bad time to own tech, but that going back a ways, it's really not so bad. So is Cramer signal or noise?

Related