Opening Bell: 12.05.08

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Harvard To Issue $600MM In Bonds (DJNewsPlus)
Reeling from the not-so-gentle donkey punch of YTD, Harvard is issuing $600MM in Bonds to redeem some of their outstanding debt and terminate some SWAP agreements. J.P. Morgan is leading the underwriters, and UBS (queen of the Swiss tax evasion underworld) is leading the retail sales of the obligations.
Merrill Deal Goes To Vote (WSJ)
Shareholders from both sides are set to vote today in one of the most ass backwards acquisitions of the century; this ranks top three with Bear's sale to J.P. Morgan, and the FED sponsored collapse of Lehman.
If I had a vote in this (I don't) I would vote against it, if for no other reason than the preservation of some part of our banking system from a historical view. Given the recent packages handed down, Merrill is more than capable of surviving.
Also, in re: "Merrill brokers have teasingly mocked the "spirit points' that Bank of America managers dole out as an employee rewards. The points can be redeemed for golf clubs, televisions and such. BofA declines to comment" -- I promise they're not "teasing", because that's just sad: cram your spirit points.
Morgan Stanley Widens Goldman Sachs Gap (Reuters)
Joining the dog pile, Morgan analyst Patrick Pinschmidt "now expects Goldman to report a loss of $4.45 a share for the quarter, compared with his prior view of a loss of $1.09."
$5 seems to be the consensus across analysts, which means that the losses will either be in the $9 range, or the $1 range, with a +/- 1 point swing potential if a dead hooker is found anywhere near Broad between now and report.


Retail Numbers In Toilet (NYTimes)
Economically it matters that things aren't selling, but only because prices are bloated. Let's use scooters as an example: given the recent increase in oil prices, let's say that the price of scooters jumps through the roof - but the cost increase isn't materials driven, it's S/D driven. Companies adjust their production capabilities/costs in the long run to reflect the new cost of the product, leading to higher operating expenses. Everything goes great for 2/3 years, and all of the sudden a recession hits, and the price of gas goes to nothing; the scooter company is screwed. Not only is its product overpriced for the market (and thus not selling) the operating model that they've adopted in the interim is inefficient given the new circumstances.
This is what retailers are going to be facing going forward: prices have been on the rise for so long that it was a reasonable assumption to forecast continued inflationary pressures. Thus, operating models are inefficient given the recent downturn in pricing structures due to the velocity of money waning.
Bear/J.P. Morgan Deal Lawsuits Dismissed (WSJ)
Shareholders consolidated lawsuits brought in reaction to the $1B price tag associated with the company have been dropped, citing corporate veil.
Waiting To Hear About Jobs (Reuters)
The article is calling for the sharpest drop in Jobs numbers in 26 years, which shouldn't have any affect on the market (but it probably will). Jobs numbers should already be priced in their individual sectors (and they are priced in their individual sectors) - so any moves on this data are fear oriented.
Jobs numbers report at 8:30 (ET) and Credit numbers report at 3:00 (ET).
Update: "Nonfarm payrolls plunged a larger-than-expected 533,000 in November, the U.S. Labor Department said Friday. The unemployment rate, which is calculated using a separate survey of households, rose 0.2 percentage point to 6.7%, the highest since October 1993." (WSJ)

--William Richards

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