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China expresses confidence in U.S. dollar (MarketWatch)
There had been some talk last week that China might be ready to take the so-called "nuclear option", if US politicians were to institute any form of protectionist measures against the country. Well, China would like us to know that it wouldn't like to do this. The nuclear option isn't ideal, in fact, the country believes that dollars represent an important long-term chunk of its $1.33 trillion foreign currency reserve. In other words -- if we don't mess with them, they're not planning on messing with us. Sounds good, but if there's one more lead-laden toy train set, then we're going to have to act, regardless of the consequences.
ECB reportedly weighing swap with Fed for dollars (MarketWatch)
Time to bust out your tinfoil hats and start crowing about one-world government. As if there weren't enough anti-internationalist opponents of the Federal Reserve, now there's talk about it helping to bail out European banks, not just American ones. This isn't as ludicrous as it might sound. If you really think that the way to stave off financial Armageddon is to pump more cash in to the system, then it really shouldn't matter where the cash goes.
Midwest Air picks offer from private equity firm (Kansas City Star)
Here's a blast from the past. Mid-tier airline Midwest Air has agreed to a buyout from something called a "private equity" firm. Apparently the firm, TPG, buys companies up and takes them private and then applies some magic potion to make them more profitable. Sounds like an intriguing idea in theory, although we're skeptical of the practice. Wonder if this'll become a trend.
Deutsche Bank Hires Greenspan for Securities Unit (Bloomberg)
Alan Greenspan continues to find some profitable situations for himself in his post-Fed career. Obviously, he remains the #1 economic talking head, holding onto the position he held when he was actually the Fed chairman. You have to figure, however, that the more consulting jobs he takes, the less he'll be able to speak in public, which is probably a good thing. After all, if you were Deutsche Bank, you probably wouldn't want Greenspan yammering on CNBC about his top stock picks, would you?
China's consumer price index rises 5.6 percent in July (People's Daily)
Chinese inflation jumped in July to 5.6%, the biggest move in 33-month high. Not to sound like an apologist or anything, but if you strip out the ever volatile food component, things looked a lot better. Meat and poultry prices jumped by 45.2% year-over-year, while egg prices jumped by 30%.
US subprime woes of no great concern; global economy strong - Indonesia minister (Thomson Financial)
Rest easy, the Indonesian foreign minister believes the global economy is strong and that the whole subprime thing is really not that big of a deal. Well in that case, we feel stupid for having been worried at all.
Boing! London starts the week with a bounce (FT Alphaville)
After watching the carnage from the second half of last week, Morgan Stanley stepped up and defended stocks. We're happy to see folks defending the market, although we missed the memo about Larry Kudlow going to work at MS. As the firm sees it, companies still have strong profits and balance sheets and that there's still a good amount of "strategic" M&A yet to be done. As we see it, strategic M&A is the last bastion of a scoundrel, but if it allows you to sell off some of your positions at more than you could've on Friday, then we're all for it.
China Has a Worse Mortgage Problem Than the U.S. (Paul Kedrosky)
Oh great, once we clean up the subprime mess -- which should take the Federal Reserve at least another week -- we're going to have to deal with the same situation all over again in China. Awesome. According to one academic there, the market is both more lax and larger (than the subprime market).
'Rush Hour' Beats Bourne at Box Office (WSJ)
As much as we love to deride me-too sequels (in Hollywood and in pharma), they pretty much dominated the charts this summer. Now could this please mean the revival of Chris Tucker's career?