AAPL: Jobs' Demise Is Priced In

As far as the options backdating and AAPL goes, I honestly don't think it will lead to Jobs' resignation. However, I think Jobs' departure is already priced in, not because of the options, but because the company has been mum about his pancreatic cancer a couple years ago. If they're not talking, you have to anticipate that he could drop dead any day now. Not that he necessarily will, but if he's not vocal about having a clean bill of health, you have to assume otherwise.

In other words, don't worry about the options scandal; a lot of investors have already envisioned an AAPL without Jobs.

MSFT, hackers n' ads

Two news bits for MSFT:

1) Vista apparently has more holes than Swiss cheese. Security holes, that is. I won't elaborate because we all expect this from Microsoft.

2) More interestingly, they're planning to make their ads a little bit smarter, much as Google has done; if you use their Live search and their Hotmail (does anyone use either of these products?) expect to start seeing ads targeted to your demographics and interests soon. At present, they're giving advertisers a promotional credit to encourage signups.

I am not sure Microsoft has done anything original, ever. Windows and DOS were ripped off from Apple and Xerox, and nowadays they're just copying Google. Did they not get the memo that Google's growth is slowing down?

Pinochet Pantyhose

A few days old, but Target caved to pressure from the WSJ, IBD and others to remove a Che Guevara item from their shelves. Link.

"What next? Hitler backpacks? Pol Pot cookware? Pinochet pantyhose?" wrote Investor's Business Daily in an editorial earlier this month, citing the Guevara case as a model of "tyrant-chic."

Even the left is happy with the decision, saying Che would never have approved of his mug appearing on Target swag. Incidentally, the Che in the Target image had a pair of headphones photoshopped under his natty beret; what do you think he would've been listening to? Rage Against The Machine is probably a little too corporate for him, as well. Maybe Che would've been a This Bike Is A Pipe Bomb fan. Who knows.

Saks: Can A New Look Attract Private Equity?

Saks -- well, they've been streamlining left and right, haven't they? Dumping their less profitable chains, spewing out cash via special dividends -- they're a lean, mean luxury retail machine at this point...

In January, they'll be unveilng a new logo. Kind of MoMA, abstract, eye-catching. Check it out:



Says Pentagram, the firm who did the design work: "We took the cursive logo, redrew it with the help of font designer Joe Finocchiaro, and placed it in a black square. Then, we subdivided that square into a grid of 64 smaller squares."

Funky ain't it? They've never had much in the way of branding; their logo has changed constantly over the years. Who knows how long this ultramodern take on it will hang around, but hopefully long enough to get them a bid. With a market cap of 2.5bn, and luxury biz still solid, I consider them a buyout target.

The Beta Tester Investor: MSFT Thoughts

I've been beta testing both Office 2007 and Windows Vista for my employer. I would like to articulate a few thoughts:

Office 2007 is a decent product... good, even. It takes most of the pulldown-menu actions you'd typically perform and renders them as modular selections in a "ribbon" at the top of the page. It has enhanced collaboration abilities and seems fairly stable. It also does its very best to create documents in a format incompatible with previous versions of Office.

Vista, however... while corporate users could afford to upgrade their computers to the specs necessary to run it, it's not targeted to them. It's targeted to home users who don't know how to keep viruses and spyware out of their system. Aero looks slick, but does anyone really need 3-D and transparent windowing?

If Vista is in widespread use a year from now I will be surprised. Office 2007 has more potential and is a worthwhile upgrade if you have a moderately powerful system. If you think either one will catch on, I recommend investing in the companies who will benefit most from users upgrading their systems. MSFT's market cap has increased a lot over the last six months. A jump from 25 to 29-30 is a big deal in a stock with this many shares outstanding.

Liquid Assets

And no, I'm not going to post that little song about the world being awash in liquidity because I know you've already heard it...

Reuters reports investing in wine is all the rage at the moment, mostly in Bordeaux and not just in the futures; cellars are filling up case by case at every hedgie home in Greenwich and surrounding neighborhoods.

As it says in the article, it's like art but in order to enjoy it, you have to destroy it. Maybe it's not a bad idea to invest in something for which demand will stay roughly stable but supply will necessarily dwindle.

Another Type Of Agricultural Commodity

From today's DR:

"In Europe, drugs are less expensive than beer or café," says a headline article in La Nacion. "An ecstasy pill costs the same as a of beer," the article explains. "A line of cocaine is less than a cup of coffee."

Everything else may be going up. But there's a major deflation in drug prices. Marijuana is down 12% in the last five years. Heroin prices are off 45%. Amphetamines have gone down 20%.

How come?

Globalization. Better supply chain management. More competition and across-border movement.

Interestingly, this report comes from Reuters today: "Marijuana top U.S. cash crop."

"U.S. growers produce nearly $35 billion worth of marijuana annually, making the illegal drug the country's largest cash crop, bigger than corn and wheat combined, an advocate of medical marijuana use said in a study released on Monday."

It's Gonna Be An H-Bomb Christmas

Arnold, in California, #1 uses an *X-mas* tree, #2 powers it with the alternative energy favorite of the business right, *hydrogen*.

Here's how I imagine his speech went:

"Here in Cally-fournya, it is full of hippies who wanted an alternative fuel winter display. So I picked a Christmas tree that uses hydrogen cells to spit on the other winter holidays, if there are any. Are there any, Maria? Oh, yes. Boxing Day. Boxing Day is fine. Unlike Boxing Day, Hydrogen is abundant on Earth. I will lead the charge to mine it from the moon, as well, and perhaps cut a trench that looks like Ronald Reagan. Also, Maria has just passed me a memo that my speech has been too pro-Christy-annie-ty. When I'm done giving her the 'you need a boob job' look, I'll respond. (significant pause) Okay...wait... (pause) Okay. In order to pacify the girly men, we will balance by selecting carols that do not endorse Christmas. Who knows 'Swarm of Rats?' "

Story

Hydrogen's been the quietest of the alternative energies thusfar, I think.

Silly Investor, Seagate Is For Porn

At a recent corporate dinner in San Francisco, the Texan CEO produced a quotable line edgy enough to give any PR people in the immediate vicinity an instant heart attack. In his exact words: "Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn."

Or, as he puts it more diplomatically when sober, it's the content that's important.

Story Link

Private Equity's Hungry

Andrew Ross Sorkin, who writes the DealBook articles for the New York Times business section recently floated the opinion that Wall St.'s appetite for private equity deal may be so insatiable that the list of "potential targets being bandied about" now included Viacom, Gap, Nike, Dell, Home Depot, Texas Instuments, EchoStar, Liz Claiborne, and Microsoft.

Some of these companies have truly ridonkulous market caps for this sort of thing (MSFT). Some of these companies are in need of a complete makeover and thus better off dying a thousand deaths (GPS). Some of the others have potential.

CHK It Out: Borrowing In Euros

Chesapeake Energy (CHK) is selling EUR 400MM worth of senior notes on the Irish Stock Exchange. Interesting play.

The money will be used to pay down revolving debt, hard to complain about that. They indicated there is strong "demand on the continent" for opportunities to invest in their company and that this move was urged by their debt underwriters. It's a strong-euro kind of market these days, so your guess is as good as mine: do they expect a strong dollar by 2016, or is this just one more point to make in the "petroeuro" case?

No One Is Talking About Project Turquoise

Not in the U.S., anyway. Why?

What's uninteresting about the fact that seven major brokerages are attempting to create a stock exchange to compete with the LSE?

The major players are Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS. They're responsible for about HALF of the business on the LSE right now.

Exchanges are -red hot- right now. Is this factored into, say, Goldman Sachs' astronomical share price? If not, is GS going to 250? 300?

Oh, and here's another thing. Think of how many companies are going public in London to avoid the regulations in the US. If you can go public on this exchange and avoid SarbOx, would you?

Taser Execs Ride The Buffalo

Taser's execs get zapped to show the safety of their product:

Delta to USAirways: Fuck a Duck

Delta sent out a press release this morning to all its customers addressing USAirways' buyout attempts which included this language:

But you should know we are concerned that this particular transaction would not be in the best interest of our many stakeholders including our customers, employees, travel partners, and the communities we serve. We are moving full steam ahead with our own plan to emerge from Chapter 11 as a strong, independent, stand-alone airline dedicated to providing you with world-class service and superior performance.

Sounds harsh, right? There's something in the language though that got my attention. Note "This particular transaction," folks. Stay tuned to this one.

Also, Insure This

I was in AIG just long enough to profit from their colossal earnings last week (high premiums + no hurricanes = mad cash, naturally). However, when every day my news on the stock is flooded with "Form 144: Filing To Sell" I have to wonder wtf is up with all the insider dumping. So I'm out.

Oil's Too Big For Its Britches

The prices of some of the oil companies vs. oil itself have gotten out of whack. XOM, CVX -- hell, most of the OIH in general (maybe not the refiners like VLO, but still...) -- are trading higher than they were when Lebanon and Israel were exchanging bombs and sending oil into the 70s.

XOM puts anyone?

Note also the impending offshore drilling bill the lame ducks may pass after Turkey Day. That one affects oil as well as natural gas.

Not Quite Granola

Check your organic foods section for this:



Wheat-free! Made from hedges, I assume. R said "Naturally, it gives you gas."

Published In Hindsight

Ah, NOW the lenders get together and publish a consumer guide on determining if interest-only mortgages and other nontraditional products are for you.

Link to the Fed's press release


Townhouse, anyone?

"The publication stresses the importance of understanding key mortgage loan terms, warns of the risks consumers may face, and urges borrowers to be realistic about whether they can handle future payment increases. If consumers are not comfortable with these risks, the publication suggests that they ask about other mortgage products."

Yeah.

Numerous links to the document available on the Fed PR page.

Good News for Mrs. Lay

...even if Kenny's not available for comment:

Ken Lay's conviction vacated

So the government spent a fortune on a trial and conviction, and now they have no chance to recover any of that cash. Does that now make this the most expensive demonization on record? For Halloween, should I wear a Ken Lay mask and my "How's Your Aspen?" t-shirt?

$1.65bn.

No commentary other than to say finally Google has a service that's not in beta.

свиньи?

Why do Gazprom's 2005 balance sheets show they hold livestock? Don't tell me they're literally sending pigs down their pipes.

Government, Save Me From The Nosy Execs

Hewlett-Packard investigation now yielding criminal charges.

It irks me that NOT A DAMNED ONE of the phone companies has stepped up to the plate and said they will do more to ensure the person they're giving info out to is the person in question. Yay for prosecutions. Yay. Wheeee.

Life insurance pays triple if you die from a goat bomb. Or not.

Bloomberg reports AIG has created an "Islamic unit" to target 300 million Muslim insurance buyers.

Do these policies include the standard language that there will be no payment if the damages are incurred as part of civil unrest, war, or terrorist action? Granted, if I lived there I'd be wanting to cover my ass right now (whether you're thinking Israel-Lebanon or the possibility of Dubya attempting a smackdown on Iran, either is valid) but if those restrictions so typical in US policies are also in the policies written in the Middle East, I'm not sure that demand will expand so much.

Send Stern Back To Earth

Rumors abound that Howard Stern may return to terrestrial radio. However, Stern constantly bags on terrestrial radio while he's doing his shows on Sirius, and Mel Karmazin swears it will never happen.

Perhaps they protest too much, and he will go back. But why is this such a terrible thing? Has he really brought in enough paying subscribers to earn that phenomenal amount of money he was paid to come to Sirius (and would, presumably, be returning most of if he broke his contract)?

I think not. If he goes, it may be a good thing for SIRI. Maybe it'll even encourage them to merge with XM, which is probably the best thing that could happen for satellite radio.

Making The Deflationary Case

Three things suggesting deflation, rather than inflation, could take hold:

1) Whiskey and Gunpowder's recent rundown of cheaper steaks at Outback, Cheesecake Factory's discount lunch menu, and TGI Friday's four-dollar appetizers.

2) $15 sneakers endorsed by Stephon Marbury.

3) The housing market.

Private Equity in ETF Form

There are a few business development companies making short-term and unsecured loans and those will soon be bundled into a nice little ETF. You can wait for the ETF, or you can buy up a few of them in anticipation. Via Marketwatch:

"The American Stock Exchange expects to start calculating and publishing the Listed Private Equity Index by the end of September, and PowerShares expects to launch the ETF next month. Because the index isn't yet published, Red Rocks can't comment on its initial components. Stocks that seem likely to make the cut include Apollo Investment (AINV), KKR Financial (KFN), Gladstone Capital (GLAD) and Allied Capital (ALD) . Most of these companies are affiliated with private-equity firms and make loans to private companies."

I picked up a little AINV. Buy it in the next 45 mins to get the 9/28 dividend.

Bies: Um, Sucks To Be The Kozlovs

The entirety of Governor Bies' commentary on the gangland-style assassination of Russian central banker Andrei Kozlov:

"We at the Board were shocked and saddened to learn of the death of Andrei Kozlov. His courage and vigor in pursuing the betterment of his country's banking system earned respect and admiration throughout the world. We extend our deepest condolences to his family."

No fighting words -- you afraid his enemies are now loitering around Brighton Beach? Hell, the Russian market didn't even blink. Maybe nobody wants Russia to be cleaned up...

Most Condos Have Bathtubs

http://www.condoflip.com/condo_flip_panic_buttons.asp

The site proclaims "Bubbles Are For Bathtubs" proudly on its front page. However, it has a traffic-light-style system for liquidation:

"If you are a seller using Condo Flip, we give you an opportunity to lower your price to a point that makes your condo irresistible to another buyer. Essentially, you are creating a dramatic price drop."

In a listing, green is a seller asking for a profit; yellow is essentially break-even; red indicates willingness to take a loss. I browsed through the listings and there's not many reds to be seen yet, but watch that space.

Reserved for D. Patrick

Race-car chica Danica Patrick inked a big deal today with Motorola. Sponsors have fawned over her recently, despite the fact that she has never won a race.

Do they see this as a chance to ink a cheaper deal with a up-and-comer, or has she merely done a better job marketing herself as "racing girlie novelty item" than she does driving a car around in circles?

Brings Anna Kournikova's mediocre tennis career to mind, though Danica has a far lower hooch factor. Ah, well, we can't all be Maria Sharapova.

Not All In The Family?

Bill Ford Jr. finally resigned as Ford's CEO today. The market has been clamoring for this for a while, but it will do nothing to relieve the company of its unfunded pension liabilities and medical liabilities.

To survive, Ford doesn't need to be taken private. It needs to slag that all in bankruptcy, and reorganize; that's The Way Forward.

Grassroots Corporate Welfare

I was linked this morning to a disaster-managment site of sorts called Protecting America. Sponsors include Allstate and a host of other insurers and contingency planners, along with several companies like AT&T who probably wouldn't mind receiving a few government bucks to rebuild infrastructure.

The site's front page encourages me to send a pre-scripted letter to my congressman indicating there's just not enough "government and non-profit disaster relief" to go around and that the government should do more. It's the "prompt and caring" thing to do!

Further: "Catastrophe funds, at both the federal and state levels, would provide the backstop necessary for companies to insure against hurricanes and earthquakes in a financially responsible manner that doesn't threaten their solvency or their ability to protect their customers from other potential losses." If the prospect of managing risks threatens your solvency or leaves you unable to protect your customers, why are you in the business of managing risks? Shouldn't you be managing a McDonald's instead?

Losing Backstreet Boys Cash To The Housing Bubble?

While they aren't selling, condos are still going up all over downtown Orlando, and from what I hear, everywhere else as well:



That the glut of units on the market now will soon be a deluge really isn't news to anyone, but what I do find interesting to note is who might be relying on the assumption that these units will be occupied, and not only that -- additionally assuming the occupants will be able to afford more than their mortgage.

Orlando has little in the way of sophisticated nightlife (if you've never been here, we have a nightclub bearing Paris Hilton's name, and that should say it all), so we were pleasantly surprised to discover The Exchange Lounge downtown, which features a cigar and wine bar upstairs. The space is decorated like an old boys' club, and the bartender indicated the third floor will soon be a champagne room.

Sadly, we were the only patrons in the joint. The bartender said this was a typical state of affairs, but not to be concerned; it'd been opened nine months prior and was funded by Backstreet Boys' manager Lou Pearlman's deep pockets, as is most of the refurbishment of Church Street. Lou firmly believes that once construction is finished on all of these condo buildings downtown, he'll have plenty of patrons.

To Lou's credit, Pearl's -- the steakhouse adjacent which bears a portion of his last name -- appears quite popular. I hope he's right because I rather like this lounge, but I strongly believe his assumptions are flawed.

GM Unveils New Camaro

Now, we just have to wait for GM to unveil the new mullet. They should have a contest among the factory workers.

A New Airline Stock Play

Can't take your liquids onboard and too busy to wait hours for checked baggage? If you're traveling for business, FedEx your toothpaste, hair gel, and contact lens cleaner to your destination, and expense it.

Might be a stock play there. Cough.

Please Tell Me White Owl Cohibas Aren't Next

On August 3rd, the U.S. Patent and Trademark Office stripped the Cuban government and its French liaison of rights to the "Havana Club" rum brand name in the US. Bacardi will be imminently relaunching rum under the name.

This was the denouement of a ten-year battle, so perhaps it's coincidental timing to Castro wheezing up a lung or whatever is wrong with him at the moment. But, it's worth noting that Fidel's possibly impending demise could change the economy of the island, perhaps even ending the embargo, and that a few U.S. products might suffer from the competition.

Bowling Alone on YouTube

I could use this space to talk about YouTube's IPO aspirations, but that's really a limited subject until they give me any sign they're going to turn a profit. Instead, I'll point out this article on the "1% rule":

1% of visitors to any "interactive" site actually create content (Guardian)

Using numbers from YouTube, Yahoo Groups and Wikipedia, the article suggests that slightly less than 1% of users on these sites will create content, around 10% will offer comments or suggestions, and the other 89% will view passively. Obviously, you want a balance of all of these groups; if YouTube has 20 million unique users, having all of them create videos would result in much banality and duplication.

The group probably most essential to survival is the creators, and the question is how to get the creators to stick around; my suggestion would be to fully embrace the blatant role of comment-whoring as a motivator, and look for strategies to get the 89% of passive users to become active participants at the comment level -- yielding sincere, organic motivation for your creators.

Profits, Cheek By Jowl

I feel a little bad for Lee Raymond -- even though he's no longer CEO of Exxon, this morning Drudge ran the infamous "massive goiter" picture of him with the story about Exxon's record profits:



You know, if the Sidney Reso case had happened recently someone would be running pictures of Sid's corpse with the caption "SHEDDING BLOOD FOR EXXON OIL MONEY" under it.

Credit Is The New Housing

Yesterday the FDIC released a whopping 29-page report about future credit losses by banks. It really shouldn't take 29 pages to say "what goes up must come down." The more eloquent terminology for this would be "inflection point," because despite recent increases in commercial loan growth, it's unlikely to sufficiently compensate for the oncoming decreases in consumer loan growth.

Additionally, think of the cash on hand at most firms! You expect commercial loan growth to even come close to making up for consumers?

You realize people (me included) have been screaming this for a while now, kinda like the housing bubble where some people (me included) were blithering about its demise a year or two before it actually started to happen. It's hard to call a top, but that's what the FDIC is doing. Analysts are now rushing to release reports saying "yeah, they're right. This will happen -- eventually," because that's what analysts do, and they'll be right -- eventually.

Calvin Ayre's Crystal Ball

I was bored last night since I couldn't go out in the rain, so I looked at bodog.com to see what current events you could bet on. (I'm not a gambler and had to teach myself how to read a moneyline in order to even know what the hell was going on.) Most of them are end-of-2006 type things, but this one caught my eye:

Bet On: Will US President George Bush end his boycott of the NAACP and make a speech at the group's national convention?

It worked out to roughly 2:1 odds in favor of him choosing to speak. (No odds are available on whether or not he will give Louis Farrakhan a neckrub anytime soon.) Sure enough, I checked Drudge this morning and there was an announcement that Bush plans to do it.

When I think "accurate predictor of future events" I don't really think of Calvin Ayre and his Playboy Mansion compound in Costa Rica, but I do like to see futures markets make accurate predictions. DARPA wanted to do this to help predict terrorist attacks. Cal's apparently not touching that one with a ten-foot pole but he's got a few items on his site about closing Guantanamo and whether or not UBL or Hoffa will have their head found first.

I think he should let us bet on whether or not if he ever returns to the US again he'll get nabbed like the BetOnSports guy.

Goldman Is The Sex

NEW YORK (Reuters) - Goldman Sachs Group Inc., the blue chip investment bank, wants a Netherlands man to change the name of a sex-themed Web site called goldmansex.com.

Link

The owner's last name isn't even Goldman -- it's Muller -- and he claims he got the nickname "Goldman" based on his overall luckiness. I think he's full of shit, especially after looking at the site and noticing he supposedly caters to business travelers. You have to wonder, though, if Goldman Sachs will prevail in this lawsuit. How likely is anyone to be confused and think that GS is in the business of providing strippers and escorts? Well, I mean, now that David Pacjin is off the payroll...

The De Minimis Turkey Leg Exception

Wal-Mart, who formerly prosecuted anyone who stole more than $3 worth of merchandise, is raising the threshold to $25: Link to CNNMoney story

"The paper said the change in policy will allow Wal-Mart to concentrate on theft by professional shoplifters and its own employees. The paper said those two groups steal the bulk of merchandise from the chain."

Makes economic sense, though it can't ever be good to have the de minimis amount publicized like this. Honestly, there's not much at your average Wal-Mart that would fit in your coat that's priced OVER $25; it's almost like giving compulsive shoplifters license to do whatever.

Haute Topic

Today's WSJ mentioned Hot Topic as a potential target to be taken private. They said it might happen if goth fashion came back in.

It's hard to get more darque than the "pre-spring 2007" collections I'm seeing. A sample, this from Givenchy:



Their balance sheets are pretty clean, I think. It's a consideration.

FT Axes Internets Division

The Financial Times, in a cost-cutting move, cuts 50 from their staff and now expects writers to produce content for both the print and online editions: Link

Their budget for salmon dye, apparently, is unaffected.

When Self Parking Is More Prestigious Than Valet

Those crazy kids at BMW have developed technology that enables a car to park itself. PARALLEL park itself, at that.

Watch the video (YouTube)

In ten years, this will be as ubiquitous as Tiptronic. Oh, wait.

Still, I want it.

ShortAirBus

...puts its head down, ribbits softly, and ponders how to extricate Boeing's schlong from its eye:

Link

PARIS - Airbus said Monday it won 117 plane orders in the first half of the year, less than a quarter of the orders announced to date by U.S. rival Boeing Co.

Orders fell from 276 in the same period of last year, a sharper drop than the broad full-year decline predicted by both jet makers after record sales in 2005.

Note also the speculation that the recent Russian crash was due to faulty brakes: IHT article

No word on whether or not Airbus will surrender their delayed A380 and inefficient A340. You knew I'd sneak a "surrender" joke in here somewhere. Sucks to be EADS, though they did at least sell some copters to the US recently. LBJ probably rolled in his grave at that one.

License and Registration

In China, certain license plate numbers are fetching big bucks.

Communism was never able to quash superstition, and now, the more 8's you have in your license plate or phone number, the more valuable it is. Combine that superstition with the rush of status-symbol vanity among the world's newest crop of pseudocapitalists, and you have plates going at government auction for $10,000 (and, supposedly, in the secondary market, some being offered at $100,000).

A recent WSJ article mentioned a marriage boom-bust cycle going on in China right now related to lucky and unlucky years, so the media is really trying to drill home this point. They're superstitious, okay? List your business contact address as 444 4th St., or incorporate in the Year of the Rooster, and you won't be able to sell a gat-damn thing in China. Got it?

Of course, in America the number 4 is the best number. Well, it is when you hold down the shift key on your keyboard and press it...

Wal-Mart: Your Meal Break Is In My Pants

Bag boy: Hey, employer, you didn't give me a toy with
my worker fun meal. In California I get a toy with my
fun meal! Oh, and a nap -- I want a nap and a toy.

Wal-Mart: Shut up and get back to work.

Bag boy: Court, we're in California. I want my toy and
a nap.

Court: Wal-Mart, you're sanctioned ~$200MM for this
atrocity.

Bag boy: Ha ha! Now give me my toy.

Wal-Mart: Shut up and get back to work.

http://biz.yahoo.com/law/060629/7b22029f26ec66e33efb3cb204327f33.html?.v=1

Ya Want Some Cake?

Cheesecake Factory (CAKE)
Share price as of Tuesday's close: $27.74
Share price now: $25.69
Percent change: -7.4%
Volume: 3.5 million shares, daily average 1.4 million

We've been to the Cheesecake Factory a couple of times lately. The portion sizes are absolutely massive; after ordering appetizers (stuff like potstickers and chicken satay, always served up by the boatload) we were, invariably, too full to think about the entree list, and generally not even still hungry enough to split a slice of their rich, decadent cheesecake.

Generally, any refusal of entrees or dessert led the waiters to look at us as if we'd slapped them in the face. I couldn't tell if they were desperate for tips or thought we were suffering from anorexia. We had been wondering if anyone had the appetite -- or expandable pants -- necessary to make it through a full meal with dessert there. Based on their recent results, I guess not.

They also have a new concept restaurant, the Grand Lux Cafe. We were in Houston a couple weeks ago and spotted one there across the street from the Galleria. Upon seeing it, I noticed immediately that it looked just like a Cheesecake Factory (the waitress eagerly confirmed). The look and feel, the price point, and the menu are all essentially similar. The portion size was, too, as a dim sum appetizer was enough for us to consider dinner. Decent, but they'd be better off, I think, if their "concept" restaurant were a new concept.

You Thought It Was Just GM, Part 2

Ford is now rated as more likely than GM to default on their debts: MSNBC article

Ford is, I think, paying the price for the ambiguity of their plans to return to profitability. GM has taken a lot of flak for all the jobs and plants they've expressed an interest in eliminating, but they know they have to do it or die so they've been extremely up-front about it.

We're Bangers And Mash

Vonage asserts it is not toast:

Businessweek article

Their assertion makes some sense, because toast is, generally, hot. With a dead-in-the-water IPO, and shiny new lawsuit from Verizon kicking them in the shins, Vonage is anything but, unless you believe any press is good press.

What hope could they have? The short memory of greedy investors hoping for a rebound, perhaps? Not likely. Deep pockets making a grab like eBay and Skype? Not counting on that, either. In fact, I wouldn't expect anything beyond a fold, and the return of their crappy theme song in five years a'la pets.com's sock puppet, but that's just me.

Qibla Compass, The Next Killer App

I read that a company called Infocom is now selling a service to Muslims that will use cellphone triangulation to orient a person towards Mecca, and they'll also send five prayer-reminder text messages a day. There is a service by a different company that allows Hindus to text prayers to Ganesh.

Perhaps an unsolicited bid to the Catholic Church for offering the e-Body and e-Blood of Christ is in order.

Take This, All Of You, and Diet

Taking a page from Unilever, Nestle is making their first major diet-company acquisition, purchasing Jenny Craig for $600MM. What's next? McDonalds acquiring Nutri-System?

Unilever, as you may know, owns the formerly-granola-and-now-sold-out Ben & Jerry's ice cream brand and other tasty snacks, but also owns Slim-Fast and apparently bought up some rights to Phytofarm's hoodia extract. I hear hoodia goes well with spam.

Two Middle Fingers From NYX

NYSE won't impose Sarbanes-Oxley in Europe

SOX 404 error, logic behind internal and accounting procedure disclosure regulations not found. Please consult a business-strangling politician or try again later.

My Nominee For Fed Chairman

...is Jack.

"WEST MILFORD, N.J. - A black bear picked the wrong yard for a jaunt, running into a territorial tabby who ran the furry beast up a tree — twice.

Jack, a 15-pound orange and white cat, keeps a close vigil on his property, often chasing small animals, but his owners and neighbors say his latest escapade was surprising.

"We used to joke, 'Jack's on duty,' never knowing he'd go after a bear," owner Donna Dickey told The Star-Ledger of Newark for Friday's editions."

You Thought It Was Just GM

Volkswagen is in the doghouse with their union these days over plans to increase their employees' workweek to a whopping 35 hours. They've also had to offer some 85,000 workers buyouts with values up to $315,000 (which, it is expected, few workers will accept). Perhaps the union's next step will be to retain some soccer hooligans to convince management that 28-hour workweeks and substantial financial losses are okay business.

GM's in trouble in Europe as well. Their efforts to shut down a factory in Portugal have led to - surprise - the threat of strikes. The company has potential, but the now apparently international "full pay until the last day" mentality is looking more likely to eat them alive.

Great Views!

I was recently in Gulfport, MS, and noticed that almost every cleared lot overlooking the Gulf now has a "For Sale" sign on it. The water and beaches are both still full of chunks of insulation, books, clothing, and other random household items, but the views are otherwise awesome.

It seems people are waiting to see if the area takes another hit this season before rebuilding. Watermark's "indefinitely postponed" the Caribbean Dream; Harrah's unloaded the Grand Casino for someone else to rebuild. Beau Rivage looks almost functional but every lot promising a rebuilt Waffle House has yet to begin construction.

New Orleans was dissimilar. The destruction was really only obvious in impoverished areas like the Ninth Ward, with the French Quarter, Garden District and business district basically rebuilt (Harrah's is reopened there).

Indian Yahoo

Yesterday's WSJ had a Mittal Steel ad containing a request for proposals for concrete and other such stuff. The most interesting thing about it was that the contact person listed two addresses, one at mittal.com and the other at rediff.com.

This is about the equivalent of a U.S. Steel RFP containing a yahoo.com email address in the contact information, isn't it? I found myself wondering if his motive was lack of confidence in his own network or the desire to tout Rediff.

As an aside, I examined Rediff's English-language site, and it contains almost exclusively stories touting the wonders of the economy in India.

Residential R/E

This morning I found myself wanting to say something -- anything -- contrarian about real estate. The bubble is about to pop, but maybe, just maybe, there is some kind of last thrash in it...

Note that the April figures came out yesterday and sales of new homes were up 4.9% when a decline was generally expected.

A few possibilities that crossed my mind:

• Uncancelled contracts and various people who didn't want to lose deposits


• Massive incentivization -- builders in FL are offering everything from copious amounts of cold hard cash to Cooper Minis if you buy a new home. Everything's included by Lennar, E-I-E-I-O.


• The increased backlog of available new homes and flattening of prices may be leading some sheeple to think a buyer's market has emerged.

The condo-flipping idiocy was long-sustained, and if you think this delusory "buyer's market" will be sustained, you could always, say, buy WCI (30% short interest) and hope for a short squeeze or something. I was lucky enough to catch it in that stock last summer. I won't be trying again, but maybe you're braver, riskier or perhaps more insane than I am.

As an aside, we walked by a fine piece of property the other night and picked up a flyer. After checking the records, we learned that out-of-town investors paid $449,000 in March 2006 and now have it listed for $555,000 two months later. I don't expect it to sell for that, but it is apparent that as far as the popping of the bubble goes, not everyone has gotten the memo.

Are Ya Ready For Some (Revenue Sharing In) Football?

If there were something like "Rules of Subversive Investing," one of them would be to keep your company private to avoid filing financial statements. It works if you want to play Pollyanna (witness the rosy pre-IPO filings J.Crew has been cranking out) or cry poor.

For proof of the latter, ask Ralph Wilson of the Buffalo Bills. He threatened to move his team out of town in the 70s if he wasn't given a bigger stadium, then demanded that luxury boxes be provided in the late 90s to give additional revenue. Now, he claims that the NFL's revenue-sharing arrangements will break his small-market team.

It is, I guess, possible to have someone rat you out despite your best efforts at obfuscation. Forbes puts together a rough valuation of all the NFL teams each year, and they say he's full of it; the team should be raking in a profit of about $36MM a year. Not too shabby in a small town.

Locals have suggested he pimp out the stadium's naming rights if he's so desperate for cash. Some company flush with cash will probably think it's a good enough idea.

Fannie Mae

Fannie Mae was fined $400MM for accounting manipulations benefiting their execs and padding their bottom line: Link

This is a huge scandal, but isn't getting the Arthur Andersen fourth degree. The media is perplexing in what they choose to highlight. Even the WSJ article today focused primarily on the former officers potentially facing legal consequences over their accounting practices rather than the specifics of the fraud and the issues it creates for its clients (plus, although this is more analysis than news, how they go about rectifying their associations w/ FM).

Darwin Gets Involved In Market Corrections?

India is on alert for suicides as their stock market slides downward.

When the most highly leveraged players remove themselves from the game permanently, does that bode well, or poorly?

Those Stable Iranian Markets

The demise of the "petrodollar" is much bandied about, but it's going to take much more than Iran's attempt to establish a Euro-based trading market to bring it down. Iran is volatile and has a suspect legal system, and neither one of these things would inspire much faith in their markets. You also have to wonder why the hell the EU would want to run currency deficits in the first place, but nobody ever said governments were expected to make any sense at all.

The Governments Own The Means Of Production

From the WSJ: "Ecuadorean officials said the cancellation of US-based Occidental Petroleum Corp.'s contract and the seizure of the company's assets didn't mean the Andean nation is nationalizing its oil industry."

Right. Petroecuador is busy compensating them as I type this, I'm sure [sarcasm]. This is yet another example of why it's best to own not the companies but they natural resources they are producing. Governments will continue to nationalize mines and facilities and impose windfall profits taxes on producers.

Junk Bonds Not Risky Enough For Ya?

How about extending credit to New Orleans, then?

Disappointingly, the terms of the line of credit are not discussed. Perhaps it contains measures for repayment in beads, beignets and revenues negotiated with the Girls Gone Wild producers, whose forward earnings are highly dependent on the revitalization of the city.

Fight Club Without All That Punching And Whatnot

The "elimination of consumer debt" that Project Mayhem accomplished can be done in an explosion-free manner if inflation is rampant. If the dollar is worthless, then credit card debt, car loan, mortgage, etc, become meaningless in real terms. Example:

You are one of the lumpen. In February 2005 you purchase a yin-and-yang coffee table for $400US. This is the equivalent of one ounce of gold.

Being lumpen and all, you probably are only paying the interest on this coffee table. Thus, in May 2006, you still owe $400US. This is now the equivalent of a little more than half an ounce of gold. If it rises more (and it will), you will soon owe your credit card company the dollar equivalent of only a few grams of hard assets.

Not that you'll have those hard assets to give them, or anything. But someone will probably have printed you a wheelbarrow full of dollars, so no biggie.

As such, why should the lumpen care about inflation? All it can do is take them from below water to level ground. It's the rest of us who used to have a comfortable view from a hill who now have to scramble around and hedge against it.

If the Fed does overshoot neutral and hike us into deflation, however, all bets are gonna be off.

Backwardation

In the US, our sufferings at the hand of the state are inauspiciously evil. From the moment you begin your day to the time you go to bed, your life is changed for the worse by the state. The temperature of the hot water in your shower, the pressure at which it comes out, the quantity of the water flow, the efficiency of the flush in your toilet, the contents of your toothpaste, the country of origin of the clothing you put on, and the price of the gas in the car that you drive, are managed by bureaucrats in Washington. - Lew Rockwell

Well, on that last one, there is a workaround of sorts. First Fuel Banks has been allowing motorists to prepay for hundreds or thousands of gallons of gasoline to lock in prices, so there is still at least one guy in the country filling up for 99 cents a gallon. Granted, he's still paying 50 cents in taxes to the feds, but at least he's not suffering for all this Iran bullshit. The company stores some of their gas and buys futures on the NY mercantile exchange to make up for the rest.

This is nothing new really. The main reason the airlines are not all completely broke is that most have contracted for years' worth of jet fuel at, say, 2000's prices.

So how to deal with rising gas prices? Buy less gas, or hedge against it. Your call. Then, tell the state to leave your toilet alone.