Weekend Cocktail Chatter
Lots of impressive earnings reports this week from the usual suspects
(America Online, Sun Microsystems, Gateway, and Microsoft, among others), and
tech stocks remained fairly strong. But the Dow took it on the chin, perhaps
because (if you're feeling cynical) people who invest in Dow stocks are the
only people who still worry about things like rising interest rates or perhaps
because (if you're feeling Chicago-school rational) the Dow has more stocks in
it that will be hit hard by a cyclical slowdown than does the Nasdaq. The truth
is it's hard to say.
In any case, the merger wave continued, with Glaxo and SmithKline Beecham
announcing engagement plans. The news sent both companies' stocks down sharply,
but their CEOs never stopped smiling. The thing is, after the 1980s, we were
supposed to have understood that most mergers don't work, and that when the
stock market punishes both stocks, the merger really won't work. But
then I remember: Even now, the stock market doesn't run companies. Men who like
the idea of running as big a company as can be imagined do. And so, on to this
week's Cocktail Chat.
1. "The Wall Street Journal reported that Warner-Lambert, American
Home Products, and Procter & Gamble are trying to concoct a three-way
deal to 'foil' Pfizer's $78.9 billion hostile bid for Warner-Lambert.
The Journal used the word 'foil,' but surprisingly, it did not run a
photo of Pfizer's CEO twirling his black mustache."
2. "The interest rate on the 30-year U.S. bond is now actually lower
than the interest rate on the seven-year U.S. bond. In other words, investors
think it's safer to lend money for a long time than for a short time
(relatively speaking, since seven years ago the first George Bush was still
president). Apparently bond traders are now anticipating a steep decline in the
already low inflation rate, beginning in the winter of 2007."
2a. "Do you think Soylent Green will really be people in 2007? I hope
not."
3. "In Microsoft's 70-page response to Judge Thomas Penfield
Jackson's finding of fact in its antitrust case, the company compared its
desire to control the presentation of Windows on PC screens to
Monty
Python's Flying Circus
' desire to avoid having its shows edited
without the troupe's input. This means, of course, that if the case ever gets
to the penalty phase, Judge Jackson will have to demand, before everything
else, that Bill Gates and Steve Ballmer bring him a shrubbery, lest he have to
say 'Ni!' "
4. "Best headline of the week: 'Mannesmann, Under Attack, Looks to
France .' Presumably praying that the grandson of Petain is running some
French telecom giant."
5. "New York Sen. Charles Schumer is taking a lot of heat for
supporting President Clinton's plan to extend Medicare to prescription-drug
coverage after taking campaign contributions from a couple of big drug
companies . But since the drug companies have firmly opposed the expansion
of Medicare before semi-caving recently, all Schumer did was take their money
and then sell them out. With today's campaign-finance system, that's probably
as close to clean government as we're going to get."
6. "Michael Berger, founder of the Manhattan Investment hedge fund, admitted
last Friday that he had been lying about his annual performance to
investors in his fund for the past four years. Berger was a well-known bear,
and over that same period often published letters warning that the stock market
was on the verge of a crash, but despite the fact that the crash never came,
investors kept giving him their money . Well, I guess there were
Millerites even after the world didn't end in 1841."
7. "Oil prices jumped this week, due to cold weather in the
Northeast . That's certainly sensible. After all, who really knows if this
winter thing is really a pattern or just a statistical fluke?"
