Losses Push Lehman To Weigh Raising New Capital (WSJ)
Lehman is expected to report losses in a couple weeks, and WSJ reports that in conjunction with this, the company may announce a raise of $3-$4 billion. From this timing, the report surmises that the loss will be worse than expected. Previously, analysts had expected a loss of around $300 million. The new round of capital raising will likely further dilute existing shareholders. It seems unlikely that Lehman could justify this kind of massive dilution, coming on top of $6 billion raised in prior quarters, unless it faced serious balance sheet challenges. How will Lehman justify several months of optimistic talk about its performance? Once again the bearish analysts and the shorts seem to have known more about the earnings of an investment bank than its own management.
Grasso's Grit May Win After All (NYT)
Wait, the Grasso pay package case? This nonsense isn't over yet. What's next, are you going to tell me there's still some Enron-related stuff in the courts? Of course not. Oh Wait! Anyway, back to Grasso. With Spitzer gone and the whole story kinda faded from memory, Grasso doesn't have all kinds of negative headlines to deal with.
Soros Says Sell (Infectious Greed)
Just a heads up (mainly to the daytime crew at The 'Breaker). Soros is apparently testifying today in front of the Senate, where he will argue on the "oil is a bubble" side of things. FT has more on what he'll be saying, including his argument that investing in energy via index funds is a problem. Gosh, would love the irony if lawmakers commenced a war on index funds.
Ryanair prepares to raise prices (FT)
Ryanair, popular among frugal travelers and airplane nerds will be forced to raise prices to cope with rising oil prices. After turning in record profits last year, the company's earnings will plunge to "only" break-even this year, which a lot of other airlines would be really jealous of. In addition to the fare hikes, there's also a company-wide pay freeze. While we're big fans of Ryanair (in theory), and its aggressive approach to capitalism and competition, we're not entirely convinced by it. For all the free-market rhetoric, the company has been accused of taking subsidies from the small airports it serves (that issue may have been resolved at this point, though last we heard, the charge made a lot of sense).
Jump Rope For Heart (Marginal Revolution)
Kind of a Tim Hartford-esque 'ask the economist' deal at MR. A reader asks why charities frequently hold pledge drives like "get someone to sponsor you jump roping" for 30 minutes, with the money going to charity. As the questioner notes, the donator rarely cares whether the actual jump-roping was done or not. Anyway, the answer, per Tyler: it's not just about the money, it's about the publicity. And all the jump roping is really just about getting people to talk about the event, etc. Guess that pretty obvious, but we hadn't really thought of it before. Just always assumed it was kind of a-rational.
Toll Brothers Reports 2nd Qtr 2008 Results
You know it's kinda ugly when that's the title of the press release. But yeah, deep losses, though if you exclude a monster write-down then the company turned a profit. Revenue was crushed, dropping from around $1.1 billion to over $800 million.
2008 Democratic Presidential Nominee (Intrade)
It could all end today if the stars align just right. Obama would win two decisive contests, 40 superdelegates could come out of the woodwork, and Hillary Clinton might see the light. On the other hand, we can think of about 8 previous days in this election when it seemed Obama could finish it, but it didn't happen for some reason or another. So we're not keeping our breath held. Anyway, on Intrade Obama's numbers haven't yet cracked the mid 90s. Right now he's at $.921 on the dollar, pretty strong... but somewhere, somehow there's a little bit of doubt.
New York mayor's office kicks off Internet Week with launch of tech VC firm (The Social)
It's Internet Week! If you notice a lot of really nerdy people stumbling out of bars late at night that's why. Actually, it'll probably undistinguishable form any other week, but that's how it goes. Mayor Bloomberg kicked things off with a party at Gracie Mansion last night. It was very nice.