Skip to main content

Opening Bell: 9.4.07

Banks to Test Debt Market This Week (NYT)
Here's a critical bellwether for you. This is the week that banks are looking to sell $24 billion worth of bonds to finance the First Data buyout. That's going to be tough enough, but then there's another $300 billion to come to market over the following month. Ultimately, we feel like there's gotta be $300 billion stuffed under pillows and mattresses around the world just looking for this kind of debt.
China's tight pork supply unlikely to ease before H1 next year (AFP)
The classic pattern that every economy goes through, whereby the people's diet goes from grain to meat as they get wealthier, is playing out sharply in China, contributing to inflation. Pork (which makes bacon, which you might find on a bacon, lettuce and tomato sandwich) is expected to remain in short supply through the beginning of next year, causing the volatile food component of the CPI, or whatever they call it, to spike. Hopefully, if inflation gets too out of hand, the central bank will apply the needed .27% interest rate increase.
Deutsche Bank CEO: Financial markets starting to stabilize (AP)
We're not sure what it is exactly, but somehow when the chief of a foreign bank gives off confident statements about the economy, we feel a bit more reassured. It's not that we don't trust guys like Mack and Cayne, it's just that, well, we're in too close proximity to take anything too seriously that they say. Anyway, the CEO of Deutsche Bank has expressed confidence that markets are beginning to stabilize, as indicators suggest the return of liquidity. Honestly, we're not convinced. But if we can get a few more up days, then we're all for it.
Recession Risk Rises as Consumers Feel Pain of Tighter Credit (Bloomberg)
Predicting recessions is a funny thing. Economists almost never see them coming until they're right there at their doorstep. Back in 2000, Gore proudly touted the fact that 49 out of 50 leading economists didn't see a recession around the corner. This was well after the NASDAQ had already started its precipitous decline, of course. Now people are talking about the fear again. And again, nobody will say that a recession is likely, but they will say that the risks are growing by the day, which seems like a total contradiction. Not that we put any particular stock in him as a forecaster, but the latest to sounds this note is the always-amusing Larry Summers.

Click Here

JC Flowers ‘vying’ for WestLB (FT Alphaville)
Those with money and cash on the side will be able to score some deals before all this subprime stuff shakes out. Private Equity firm JC Flowers is said to be gunning for troubled German bank WestLB, which has been hit hard in all this. Flowers is said to be in the pole position to pick up 38% of the bank.
A Thirst for Milk Bred by New Wealth Sends Prices Soaring (NYT)
Just like pork in China, the price of milk is soaring internationally, helped in part by a wealthier global population, eager to guzzle the fatty white stuff. Farmers, many of whom are dealing with higher grain prices, are relieved that they're seeing pricing power for the first time in a long while. Obviously, signs of inflation are everywhere, but this is a good excuse to kick the milk habit. Come on -- it's pretty foul. Stop eating cereal for breakfast (steak and eggs are the way to go) and drink your coffee black (much tastier), and you'll totally be able to skip this cost.
Taiwan Stock Exchange Considers I.P.O. (Dealbook)
Not to be left out of the public party dance that every other stock exchange has been invited to, the Taiwan Stock Exchange has indicated that it's likely to do an IPO of its own. The public company will represent a combination of the stock exchange and the regional futures exchange.
Look who's blogging: Alan Greenspan (Big Picture)
Every time the 'maestro' sneezes, the world gets a cold. Seriously, as far as we're concerned, Alan Greenspan is a troublemaker, threatening to roil the world economy every time he opens his mouth. But it's cool that Alan Greenspan is now blogging, sort of. He has one post on an Amazon blog writing about "The Age of Turbulence". If we had had to bet, we'd call for a second entry some time in early 2008.