Ills Deepen in Subprime-Bond Arena (WSJ)
Fears that the subprime mess is contagious have recently been exacerbated, as top financial houses have announced profit hits. And then on Friday, Moody's revealed that it was downgrading, across the board, many subprime backed securities, which could trigger a fresh round of pain. Given the ripple effects that a ratings downgrade can have in any industry, this could get a little ugly. And as evidence for how ugly this news is, Greg Newton notes the timing of this announcement -- 6:33 on Friday, just when absolutely nobody is paying attention. Unfortunately, Monday's here, so time to deal.
GE considers joint Dow Jones bid (Financial Times)
As long as the Wall Street Journal can report on the happenings of its parent company, there's no reason that the Financial Times can't do the same. Although the Pearson-may-be-making-a-bid-for-Dow Jones story originally broke last week, it's reporting that Pearson may team up with GE on the deal. GE's name, of course, has been floated around for awhile, and the most recent reports were that it was going to partner with Microsoft, although that apparently ended up falling through. Pearson would be a much more natural partner, since they, you know, actually have some experience with this stuff. As for GE, its primary motivation is obviously to keep Dow Jones associated with CNBC.
Push for increase in biofuels causes oil industry to scale back (AP)
The oil industry says it's revisiting its plans to expand refining capacity amidst increased investments and subsidies for biofuels (aka ethanol). We've talked about this before, and though the industry's stance may seem impolitic, the argument is actually pretty reasonable. Why would these companies expand gasoline output if, as the government says, ethanol will represent a major chunk of US energy balances in ten years? It doesn't make sense. It's a little hard to tell, however, whether the industry is just engaging in a little gamesmanship, or whether it's seriously revisiting its plans. Either way, the government has to see, by now, that subsidizing ethanol is not without significant other costs.
Blockbuster Says It Will Back Blu-ray in DVD Format War (NYT)
Blockbuster announced that it will back Blu-ray over HD-DVD in the next gen DVD format wars. It's been a real back and forth between the two sides, although lately it's been Blu-ray coming out ahead, in part because of greater availability on the format. Naturally, the whole affair has got people talking about VHS vs. Beta once again, although it would be funny if Blu-ray won, since that's the horse that Sony (Beta) is backing. Perhaps, after all this time, the company might feel some modicum of vindication or at least the joy of being on the right side of history.
NZealand shares close sharply higher on airport takeover news (AFX)
Stocks in New Zealand surged higher after it was revealed that the publicly traded Auckland International Airport -- one of the nation's blue chips -- was the subject of acquisition interest. This story may not be so interesting if you're not invested in New Zealand (though you may be if you're playing the carry trade), but it does sort of make us pine for a system with publicly traded airports. Somehow, we imagine, our aviation infrastructure woes would be a lot less acute in such a scenario.
China Fines Six Banks for Lending to Stock Purchases (Bloomberg)
Here's a shocker, the Chinese government is saying that six major banks failed to properly scrutinize loans, and that a lot of loan money has been illegally going into the stock market. This will probably come as a surprise to exactly nobody, and exactly nobody would predict that the fines leveled against these banks will actually stop the practice. At least until the market crashes and these loans stop getting paid back, it's got to be too lucrative -- even with the fines.
CME, Intercontinental Exchange Prepare to Sweeten CBOT Offers (Bloomberg)
Both the Merc and the Intercontinental Exchange are prepared to "sweeten" their respective bids for the CBOT. The Merc has indicated that it may increases its bid by another 14%, while the Intercontinental Exchange says it has "a few bullets left". The whole things sounds a bit like the world of professional wrestling in the days when there was WWF, WCW and ECW. In the end, they all just merged, which is maybe what these companies need to do.
Stocks aim to keep rally going (CNNMoney)
Forget all that subprime stuff or China stock stuff and the rest, early indications are that the rally is back on. There have been a few market hiccups this year (usually prompted, in some way, by something that happened overseas), but you've gotta hand it to this bull. To say it has legs would be an understatement.