Under The Radar News - Tuesday

• White House denies imminent Iran attack. Israel Army Radio reported President Bush intends to attack Iran before the end of his term. The White House denied the report, but conceded the military option had not been taken off the table. "As the President has said, no president of the United States should ever take options off the table, but our preference and our actions for dealing with this matter remain through peaceful diplomatic means. Nothing has changed in that regard."
• Hungry for stocks. Global investor confidence (as measured by State Street) rose to 81 in May from 72.3 in April, its highest level in seven months. Equity risk appetite is surging. European investors are the most timid.
• Arbitrage opp. London shares of Thomson Reuters (RTRSY) are 14% cheaper than their Canadian counterparts, offering a potential arbitrage windfall. UBS analysts say they "cannot think of a fundamental explanation for the difference" and suggest investors may want to bet on the gap closing.
• 3G iPhone in less than a month. "Someone very, very close to the 3G iPhone launch has told me that Apple (AAPL) will announce their new model at the WWDC Keynote on June 9. The second-generation iPhone will be available worldwide right after the launch, and not at year's end, as previously thought."
• Student lender dropouts. The Education department is expected to outline new terms for purchasing loans under the rescue provisions approved recently by Congress. The terms are not expected to be favorable to student lenders, fueling speculation SLM (SLM) and others may withdraw from the government's subsidized student-loan program.
• Google frets renewed talks. Google (GOOG) convened an emergency meeting last night to discuss the implications of a Microsoft (MSFT)/Yahoo (YHOO) search-ad tie-up. Sergey Brin said Jerry Yang could find refuge within Google if pushed out of Yahoo. Execs also said they think Google is recession resistant.
• Banks link liquidity pools. Goldman (GS), Morgan Stanley (MS) and UBS (UBS) are combining their private stock trading operations, a move they hope will increase liquidity and enhance their competitive stance. Investment banks use liquidity pools to buy and sell large block anonymously at a fixed price.
• Banking on expensive oil. Oil drillers are increasing oil-price assumptions upon which they base their decisions. BP (BP) is now using $60, and Shell (RDS.A) something higher than that. With oil at almost $130/barrel, this may not seem shocking, but oil companies are notoriously conservative in their planing, and until quite recently assumed long-term prices of just $25.
• AOL Money to host CNBC videos. AOL (TWX) announced CNBC (GE) will become a primary content provider for AOL Money & Financial video site.
• Google's WiMAX stake: money, not infrastructure. Google (GOOG) dispelled speculation that its venture into WiMAX with Clearwire (CLWR) might include using Google's "dark fiber" resources to reduce the cost of connecting its mobile sites to the wired internet. "At this time Google's involvement in Clearwire is limited to the terms of its investment and does not include providing network infrastructure," a spokesman said. Google will be the default search engine, and is investing $500M in the venture. Google uses its fiber network to interconnect server farms and create "peering relationships" with major operators.
• Dreamliner's photo finish. "We are making progress [on the Dreamliner 787]," Boeing (BA) said during a media tour yesterday. Project leader Pat Shanahan says it will be a "photo finish" whether Boeing can meet its "power on" milestone, and admits new "grenades" fall on his desk every half-hour or so. But there haven't been any planet killers, and it's been a while since the last meteor hit. Shanahan says morale on the factory floor is much improved.
• Food inflation tied to speculation. Spectators are at least partly to blame for skyrocketing commodities prices, the EU says. "There has been increased activity by speculative investors in commodity-related financial markets to hedge price risk or use excess liquidity in the wake of the financial market crisis. These activities lead to increased price movements and volatility on futures and spot commodity markets and have amplified the underlying price movements." Non-speculative factors include poor weather, high energy prices and rising food demand from emerging markets.
• Plastic stocks meltdown? Despite a "growing feeling that stand-alone credit-card lenders (AXP, DFS, COF, MA, V) will weather the economic slowdown," recent data indicate credit card borrowers are paying back less of their monthly balances, and are finding it harder to catch up once they fall behind. Meanwhile revolving credit outstanding jumped 6.7% in Q1 Y/Y, leading WSJ's Heard on the Street to surmise, "It's a gamble for card companies to lend more to people who are turning to relatively expensive debt because they're cash strapped. And it's a bad bet for investors to load up on the card companies taking that gamble."

Comments

[QualifiedBuyer]

Re. "Plastic stocks meltdown?", not sure I'd consider plastic stocks a bad bet. I mean, we've bailed out investment banks that made bad decisions, shifted billions of bad debt to the fed, given tax breaks to builder that drove up housing prices, are about to use government backed companies to bail home owners that made bad decisions, all on the backs of the taxpayer and to the detriment of our retirement plans by erosion of the dollar. Surely, with some creative thinking, the government can figure out a way to tranfer this bad debt to the taxpayer as well, giving card holders the ability to charge up more debt using the same "it's good for the economy" philosophy. At these prices, looks like a buy opportunity.

[Brewer]

No one is expecting or has ever expected the iPhone v2 to not ship until the end of the year. It will be out by the end of June, probably sooner. This expectation has not changed.

[Geddy]

Brewer, your post is a bit confusing. All the advertising I've ever seen on the v2 phone has mentioned end of June/early July for release. I've never seen anything on end of year.