Articles from 04/06/08 to 04/12/08

My colleague Suzanne Pratt reminded me of the times when we used to chase down G7 finance ministers to get their comments on the dollar and other financial issues. The Group of Seven is made up the finance ministers of France, Germany, Italy, Japan, the UK, the US and Canada.

In the 1990’s, it seemed important for us to cover the group’s meetings. Even though the meetings happened over the weekend, the news flow was such that it was still “news” by Monday night and often into the week. Times have changed. The immediacy of financial information has wiped out some of the “news” value in a G7 meeting, but the G7 has also become less relevant in world financial markets. The fastest growing countries -- China, Brazil, and India -- are not part of the group.

I don’t know about you but whenever someone uses the word "resilient" to explain what's behind a rebound in consumer spending -- I always cringe. What exactly does that mean? Typically, the term is heard in the following context. An analyst or economist, when pressed to justify an unexpected jump in household shopping, will often respond by saying "it looks like consumers are showing amazing resilience."

"Showing amazing resilience?" Where’s the insight in that observation? How does that explanation enlighten anyone?

By definition, someone demonstrating resilience means they are resourceful, imaginative, or creative in their actions. OK, we get that. But it seems to me it is such a vacuous term when used to explain consumer behavior.

I have been working for years on getting an interview with Aeropostale-- ever since it was spun off from Macy’s. I have never been successful, but over the past week, our field producer Harlan Reinhardt lobbied hard for the company to give us a chance. And it did.

After meeting the company’s CEO, Julian Geiger, I can’t figure out why the company has been so camera shy all these years.

The first thing Gieger did when I walked in was to offer me half of his sandwich. The funny thing is, he was serious. He is a regular guy with a great sense of humor, who likes to joke around and laugh. Not many business leaders let down their guard around a camera crew.

I also had the pleasure of going to the Willowbrook Mall in Wayne, New Jersey. What was striking to me as I passed Hot Topic, Abercrombie & Fitch, and other teen stores is how different they are from each other. Admittedly, I am a little out of touch because we don’t really have many malls in Manhattan.

What's interesting about this week's Bill of Health is that "corporate medical clinics" are something that a great many large companies of another era - the 1950's and 1960's - used to have. Company infirmaries were a commonplace service offered to everyone, from executives to the guys driving the forklift at the warehouse. Full-service infirmaries fell victim to corporate cost-cutting efforts in the 1970s. By the 1980s, the idea of a company staffing its own medical clinic for the benefit of employees was considered a quaint throwback, and most companies were busy outsourcing any of their medical obligations to HMOs as another cost to get off the balance sheet.

The word “authentic” has been overused lately. But it’s about the best word I can come up with to describe the CEO of the New York Stock Exchange who I interviewed for the first time today. Duncan Niederauer is a regular guy. He took over as the boss of the Big Board last December when John Thain moved over to Merrill Lynch to become the new Chairman and CEO of the troubled investment firm.

Niederauer talks and acts like a stock trader. His style is breezy and friendly. Minutes after I shook his hand, we were already talking about his years at Goldman Sachs, his three kids, and why he’s a fan of the Cleveland Indians (His mother is from Brooklyn and doesn’t like the Yankees, forcing him to pick any other team to root for. He was attracted to the underdog Indians.) He’s starkly different from Thain, who is reserved and formal. I found it revealing that Niederauer chose not move into the grand office that Thain occupied -- with a combination of antique English furniture and a stock ticker -- preferring a more modest space down the hall.

As a mother of two, I can find parallels between the housing mess and parenting. It’s fun to let the kids stay up late, make a mess, and have a good time. But the price is paid the next day. If the party goes on too long, someone is bound to get hurt.

That’s what happened in the mortgage market. Rising home prices disguised bad decisions by borrowers and lenders. But everyone seemed to be having a good time, getting a home of their dreams or a hefty bonus. Seems to me the regulators are like the mothers who let the party go on too long. Unfortunately, a lot of people are getting hurt by the lax approach that took hold when everyone was having fun.

I thought it was interesting that Boeing stock went up, even though the company announced today another delay in the development/delivery schedule for the 787 Dreamliner.

The answer is that while Wall Street doesn’t exactly like bad news, it really hates surprise. And Boeing has been doing a good job of keeping the analysts in the news, so today’s announcement was just as expected.

Guess building a new airplane is harder than it looks. And it looks plenty hard.

The Chicago Board of Trade was established in 1860 as a place where buyers and sellers could trade commodities through futures contracts. Farmers, millers, and other users of commodities traded futures to hedge risk. Speculators took opposing positions to make money on the price movements of commodities.

It's a system that has worked beautifully for 160 years, until now. A century ago, and for that matter a decade ago, few retail investors had interest investing in corn, pork bellies, or natural gas. But, portfolio diversification and rising commodity prices have encouraged many investors to wade into commodities.

One way to get exposure to commodities is through a commodity index fund. These funds track one of two commodity indices and offset risk by purchasing futures contracts. And, they are buying a lot. Dan Basse, President of Ag Resource Company, thinks the funds have been pouring about a billion dollars a week into grain futures since the beginning of this year.

One trend that I find especially interesting is the increase in hostile takeover bids this year.

You would think that in a soft stock market, companies would be receptive to “friendly” deals. After all, most acquiring firms pay a sizeable premium above the current stock price of the firm being bought.

Even Rich Peterson at Thompson Financial is stumped by this surge in unsolicited takeovers. He theorizes that companies may be desperate to boost earnings and market share in the slowing economy. Acquisitions are often a quick way to do that -- so buyers may willing to force the issue.

Trade politics haven’t traditionally lined up with Democrats on one side and Republicans on the other. In the past, regional and business interests lined up to create a bi-partisan consensus on trade. But in this presidential election year, that’s much less the case. While there are still some Democrats who support the Colombia Free Trade Agreement, they are harder to find. The downturn in the economy has some Republicans also seeming less enthusiastic about this deal.

It may be that past free trade deals were the easier ones to find agreement on. It may also be that the consequences of those free trade deals are now clear. Trade creates winners and losers; and, unfortunately, it isn’t hard to find the losers among the outsourced, downsized, or underemployed workers in key battleground states.

According to the Pew Research Center for the People and the Press, most Americans finger inflation as the nation's top economic concern. 49% cite rising prices, more than twice as many as those who say jobs are hard to come by.

This is good news.

When people are concerned about rising prices that puts pressure on policy makers to act. If more people were concerned about jobs than inflation, there would be more pressure to adopt inflationary policies.

Inflation takes off when people give up complaining about rising prices. That's what the Federal Reserve is talking about when it refers to "inflation expectations remaining well anchored."

And speaking of the Fed . . .