Opening Bell: 11.28.07

Posted by Joe Weisenthal, Nov 28, 2007, 7:29am


Click Hereoiltanker.jpgOil eases towards $94, U.S. economy and OPEC in focus (Reuters)
So what if oil never gets to $100. Could it be, is it possible? Who knows. If traders go way negative on the global economy and somehow the Dollar strengthens, then it's conceivable, but trying to guess this stuff would just make us look like fools. Meanwhile, it's important to remember that the "century mark" isn't a global phenomenon, but one that only has meaning if you're in the US. Check out the latest from Paul K, where he looks at a multi-year price chart in several different currencies. One thing's clear: no matter how strong your country's currency has been, oil has been getting more expensive. How do you say Peak Oil in Japanese?

Top Economic Adviser To Leave White House (WSJ)
George Bush's top economic advisor, Al Hubbard, is leaving at the end of the year. Notice in the headline, the Journal didn't use the guy's name, which is probably because all of 7 people know who Al Hubbard is. The good news: George Bush didn't create the precarious financial state we're in today, and he probably can't make it much worse in his final year in office, regardless of who fills Hubbard's shoes. Our vote for his replacement though: "world's greatest economist" Lyndon Larouche. Exactly what would be needed to turn Bush's lamest of lame duck years into something we could all get excited about.

Why Citi's 11% Coupon Doesn't Mean it's Paying Junk Rates (Felix Salmon)
Felix Salmon puts in plain language this post from Andrew Clavell about why the 11 percent rate on Citi's Abu Dhabi money isn't all its cracked up to be. No need for a summary of a summary of an explanation of the news, so just click on over.

Verizon’s Open Announcement Is A Big Deal, But Not For The Reasons You Might Think (Mobhappy)
Lots of enthusiasm over yesterday's announcement that Verizon would be "opening" up its network to outside phones and applications for the first time. Potentially a very big move for the company, though we'll see how it all goes down before getting into a full lather. Carlo Longino offers a more skeptical take. His core point: Verizon is now offering exactly what Cingular, er AT&T and T-Mobile have already been offering for a while, the ability to bring any device onto the network. Jeez, well when you put it that way, it doesn't sound like such a big deal.

Cable Dodges Tighter FCC Control (WSJ)
Well in the end, the big FCC meeting pretty much proved much ado about nothing. At least for now, Cable is safe from the x-ray eyes of FCC commish Kevin Martin, who didn't really manage to get much of anything accomplished. Even his Republican allies we're all like "whoa dude, you're going a bit too far with your regulatory zeal, and your data is suspect". Next up for cable to worry about: intense competition, the economy.

Jury clears former JDSU execs (San Jose Mercury News)
Little trip down memory lane here: a Jury in Oakland, CA found that executives of optical networking firm JDS Uniphase did not in fact break insider trading laws for their actions during the last tech bubble/bust. This might actually be an important cultural milestone, if you think about it. You know that if this case had happened in 2004, they'd have been found guilty regardless of the facts. Now in 2007, almost 2008, the pain of the old days is far enough gone that juries aren't just rubber stamps for prosecutors. Just a possibility.

Cyber Monday into Resolution Tuesday (Yodel Anecdotal)
No easy way of fixing past mistakes, particularly ones as big as a system collapse on "Cyber Monday". For Yahoo's small business merchants, there's not much that will console them, particularly if customers went elsewhere yesterday. But, at least they're apologizing.

Wells Fargo Plunges Into Mortgage Muck (AP)
Honestly, we tend to lose track of who and who hasn't written off billions over subprime exposure. Apparently Wells Fargo hadn't lost anything, but now they have -- $1.4 billion to be exact, not exactly the end of the world. Said one analyst: "Wells Fargo isn't superhuman and they made some bad loans just like everyone else." We'll drink to that.

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Posted by , Nov 28, 2007 7:55AM

i am shocked - SHOCKED! - no mention of the WSJ article that BAC made overtures to C.

what could possibly be bigger news than that?

Posted by anonymous, Nov 28, 2007 8:01AM

looks like layoffs at bear today. conf rooms fully booked by hr and tissue boxes delivered by the truckload.

Posted by Anonymous, Nov 28, 2007 8:37AM

Verizon's network is CDMA. Therefore most of the devices in the world, including AT&T's, can't use it. What is Verizon talking about? Fluff.

Posted by TheUnrepentantGunner, Nov 28, 2007 9:17AM

8:37 I take it it means that Sprint can use it?

I just checked wiki for an authoritative list on who uses CDMA... I couldn't find one. I really think its just Sprint and Verizon, but if someone could prove me wrong that would be great.

One other point. You still, I think, cant take a CDMA phone anywhere in Europe and get any reception at all. If someone that actually knows about the industry can shed light, that would be awesome.

Posted by Anal_yst, Nov 28, 2007 9:31AM

Most of the world uses GSM or some derivitive of it i.e. hsd(u)pa, umts.

Verizon's evdo is superior to the edge used by att, but again theres that whole world compatibility issue...which as far as I know the only vzw phone to be compatable is the world version of the new bb.

also kevin martin = hack

Posted by Bulging Bracket, Nov 28, 2007 11:32AM

There are a number of carriers using CDMA across the world (all 3G is based on a flavor of CDMA, but that's not the real point). South Korea has it, some South American countries, etc. As per usual in wireless though, the "common" standard isn't all that common thanks to different frequencies, etc.

CDMA had a much more stable upgrade path to 3G, as can be seen by the differential rollout of it between CDMA and GSM providers in North America. Bell Verizon and Sprint have been the 3G leaders, while HSDPA has lagged severely. 3G rollout in Europe has been driven by the need to fulfill licensing requirements and the higher network density even as they fight with the problems of upgrading GSM networks.

CDMA has been a better solution for providers while GSM offers more flexibility for customers. It has been an interesting fight.

Posted by Calgary Schmooze, Nov 28, 2007 12:16PM

The option of using the 470-600 MHz UHF band in the future should help in some aspects of deployment, certainly in signal penetration and propagation. This should lead to lower deployment costs for providers.

Posted by , Nov 28, 2007 4:28PM

Felix strikes again! This guy's stupidity never ceased to amaze. First he makes the stupendous error of equating the Citi bond's 11% coupon rate with its rate of interest. Then he retracts his story by quoting some new guy's (Andrew Clavell) batshit crazy explanation for why Citi isn't paying 11% interest on the bond.

The bond is a mandatory convertible and the number of shares it will convert into depends on the price of the stock. Now I admit that this is a pretty complicated instrument and I have not read about how to price such a bond. But I seriously doubt that Andrew Clavell's explanation is anywhere near being correct since (a) he incorrectly treats a MANDATORY OBLIGATION as an OPTION, (b) he is unable to calculate the the exact rate of interest on the bond (c) he doesn't even consider that the PRICE of the bond might have something to do with its rate of interes.

All of these "financial journalists" and "experts" seem to be completely full of shit. I'm amazed that this even needs to be pointed out, but the most important question here is HOW MUCH DID ADIA PAY for this 11% $7.5 billion par (mandatory convertible blah blah blah) bond? As every elementary school child knows, if the bond was sold at a significant discount to par then the ADIA will be receiving significantly more than 11% interest. Similarly, if it was sold at a significant premium to par then the interest rate will be significantly lower than 11%, and if the bond was sold AT par (i.e. sold for $7.5 billion) then the rate of interest is 11% (ignoring the convertibility issues). So what the actual rate of interest is on this bond all depends on how much ADIA paid of the bond, and nobody seems to know how much was paid ... That information probably won't be known until the next quarterly or annual financial statements from Citigroup. In the meantime, let us take a moment to laugh at Felix and all those other idiots who thought that an 11% coupon rate meant an 11% rate of interest.

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