Bush to Expand Government Role to Deal With Subprime (Bloomberg)
Well, so much for that whole 'Bush is an Austrian let the chips fall where they may' thing. The prez has established a new plan whereby the federal government will insure mortgages for delinquent, subprime borrowers, allowing them to refinance at better rates. And while they're at it, maybe they can extend the life of their mortgage to 70 years, just to get the monthly payment down to something manageable. It's almost tiresome to cry 'moral hazard' at this point, but what the heck "Moral Hazard"! Anyway, we wanted a compassionate conservative, so this is what we got.
McGraw-Hill replaces president of Standard & Poor's (Reuters)
Despite the fact that S&P has performed absolutely flawlessly during this whole credit debacle, with all blame resting on some faulty models (bad models, bad!), McGraw-Hill has decided to replace the unit's President. You might, however, be tempted to call the move window dressing, since the new president is another top S&P executive. This is not quite what's meant when they say 'change starts from within'.
Dell reports 2Q earnings jump (Thomson Financial)
Thank god for the laws of physics. Eventually things fall so hard, with so much crap hitting so many fans, that things will reverse themselves, at least a little. Over the past couple years, Dell has been hit by accounting scandals, desisting threats, terrible customer satisfaction, exploding batteries, product lameness, questions about stock buybacks, et. al. ad nauseum. So, eventually the company had to come through with a decent quarter. That they did, beating analyst estimates on the back of respectable (but by no means amazing) sales growth. Hats off.
Mexico Prepares to Allow U.S. Trucks to Cross Border (Bloomberg)
We must've been on a different planet for the past 12 years, because we were under the impression that this is what NAFTA was all about. Apparently that part was blocked. Anyway, good news for free traders and truck lovers. Now, about that privately-owned highway connecting Mexico to Canada...
Bulls in control before Bernanke (CNNMoney)
When you want to be absolutely, positively sure to answer a question correct, you use two lifelines. Only makes sense. Today the market will get a double dose, as Bush's new plan will be followed by a speech from Bernanke discussing the financial situation. It's doubtful that he'll offer anything concrete, but our resident Kremlinologists Fedlinologists will be all over it looking for clues about future policy.
Sears Holdings Reports 40% Drop in Profit (AP)
We're not going to say one word about a profit drop at Sears, because we're sure that Eddie Lampert would just tell us 'we don't get it'. Seriously, if you think that declining sales and profits are a bad thing, then Sears isn't for you. But if you want a new way of doing business, then step right up.
RIM shares rise on Microsoft (Financial Post)
One of the stupider rumors to hit the wires of late was yesterday's speculation that Microsoft could make a play for Research in Motion, sending RIM stock higher. The source of the rumor insisted that Microsoft would make such a move in order to fend of Google's mobile ambitions. But of course, Microsoft already has its own Mobile OS that fits in with its overall product line. One analyst who thinks a deal is possible is quoted as saying "The amount (Microsoft) would pay for RIM is a little pimple on a hippo's ass". That's actually not true at all though. It's more like a 90-lb. mole on the hippo's ass, as it would cost Microsoft a fifth of its market share.
The Greenberg Index (Infectious Greed)
We love contrarian indicators here at the 'Breaker, even if they're not always reliable, they're always fun. Paul Kedrosky proposes that time temporary market bottoms by a spike in the presence of Herb Greenberg on TV. Now who's going to keep a good measure of that?