Weekend Cocktail Chatter
Is it OK to stop saying: "Big week in the markets"? But it was. Spurred,
oddly enough, by a Fed rate hike--it used to be programmatic that stock prices
fell when the Fed raised rates--the Dow reached 11,000 for the first time in
months and the Nasdaq set new record after new record. Price-to-earnings ratios
are fairly meaningless statistics--since they don't take into account how much
capital companies are using to get their earnings--but if we can use a
meaningless stat, the market's current P/E ratio puts all those that came
before it to shame. Or, alternatively, the market's current P/E ratio makes all
those that came before it look sane. (Those two sentences sound so much alike,
and yet mean such different things.) Of course, the fact that the United States
and China reached a deal on a wide-ranging trade agreement is a nice symbolic
statement of part of the reason why U.S. stocks are so much more valuable today
than they were a decade ago. The world, at least in the economic sense, is just
a much bigger and more profitable place. Which doesn't mean you need to eat,
drink, and be merry tonight. But at the very least, Chat.
1. "The United States and China reached a landmark trade
agreement . As part of the deal, China agreed to import up to
40 American films a year, up from 10 a year now. An unwritten side
deal ensured that neither Message in a Bottle nor Random Hearts
would be included in the list."
2. "Gucci announced that it won a quiet bidding war for
luxury retailer Yves Saint Laurent. Soon there will be only four major
fashion companies in the world --Gucci, LVMH, Prada, and Armani--and
they'll still be competing for the exact same tiny group of customers."
3. "Standard & Poor's said Pakistan had effectively defaulted on
its bonds when it asked current investors to swap their old bonds for
new ones. The world's markets returned a unanimous verdict of 'Who
cares?' Presidential candidate George W. Bush would have had a
comment, but he decided to wait until he figured out exactly where Pakistan
was, and what 'a bond' meant."
3a. "Standard & Poor's also announced that it was downgrading
National City Corp . from a 'hold' to an 'avoid.' Next
for the stock: 'avoid at all costs.'"
4. "Kurt Kinzius, the executive of German phone company Mannesmann who
earlier this week testified that he was at a meeting where a Goldman Sachs
banker told Mannesmann's chairman that Goldman would not help Vodafone launch a
hostile bid for Mannesmann , filed a new affidavit saying that
he hadn't been at the meeting. 'I have now had an opportunity to
refresh my memory ,' Kinzius said. 'I was lying the first
time,' Kinzius did not add."
5. "Hewlett-Packard spinoff Agilent went public on Thursday and watched its
stock price jump better than 50 percent. Surprisingly,
Agilent, although a high-tech company, is profitable and has been profitable
for quite some time, and yet investors flocked to it . A breath
of sanity arrives."
6. "Rite-Aid, whose stock price has been crushed in recent months because of
concerns about accounting irregularities , announced Thursday
that long-time auditor KPMG had resigned as its accountants because it could
not rely on Rite-Aid's management to provide accurate numbers .
Let's face it. Here's where Rite-Aid's corporate communications and investor
relations people get a chance to earn their salaries. 'KPMG left because of:
Personality conflict? Health reasons? Utter disgust? ... No, cancel that last
one.'"
7. "Boring headline of the week: 'Corning said it agreed to
acquire Oak Industries in a stock transaction valued at about $1.8 billion.'
The really sad thing is that I'm sure Oak Industries' revenue is close to the
price of the transaction. If it were a Net company , it'd be,
oh, 30 or 40 times less."
