Market Talk

Newswires Max Murphy writes:

Sirius XM (SIRI), hoping it has Adonis DNA of its own, launches “Tiger Blood Radio” to tackle all things Charlie Sheen starting at 6:00 am EST Saturday.

Channel will discuss the latest twists in the simultaneously tragic and hilarious public meltdown of the playboy actor, and feature interviews with some of the, well, ladies who have made Sheen’s acquaintance.

No word from Howard Stern, SIRI’s most popular talent, who wanted to give Sheen an open mic on his SIRI channels. SIRI clearly can’t wait because it’s busy, “Duh, winning!”

(Photo courtesy of the Library of Congress.)

Jesus, Mary and Saint Joseph. You think the Chinese are our biggest competition? Watch this.

Why do I suddenly feel like pounding my fists in the beach?

We’ve been over this ground many times, so in case you’ve been extremely out of touch, here it is again: Profitability in corporate America has rebounded sharply during the past year because companies aggressively cut costs — mostly by reducing their workforces — to meet a greatly reduced level of demand. Demand has picked up a little, but not enough to inspire much hiring.

Apparently this dynamic still hasn’t sunk in yet with a lot of folks because the New York Times has an explainer today titled “Profits are booming. Why Aren’t Jobs?”

It does a good job of answering the question, but feels the need to characterize it as “the enduring mystery of this Great Recession and Not So Great Recovery,” which is irritating. No mystery here whatsoever. If profits were smoking because sales were exploding, driven by incessant demand, and businesses still weren’t hiring, then yes, that’d be screwy. But that ain’t the case.

The Times could’ve actually saved some space and gotten right to the point, instead of leaving this comment from Simon Johnson for the very end of the piece: “I don’t see a pop in corporate hiring, because why should they hurry?” said Professor Johnson, the former International Monetary Fund economist. “They are paying themselves well and with demand so low, they don’t feel they are missing out on anything.”

Bingo, Mr. Johnson. What’s so mysterious about that?

Just to send you off into the weekend with a little fire in your belly, here’s the Foo Fighters hard-rocking and ass kicking version of “Baker Street.” I heard this tune years ago on a Cape Cod radio station, but couldn’t find it anywhere and never heard it again. I forgot about it until this week, after the death of singer Gerry Rafferty, who scored a hit with “Baker Street’ back in the ’70s.

I should’ve known it’d be on YouTube; Jay Lustig over at nj.com linked to it. I was a little too young to appreciate the original (here’s a link to the it), and I’m probably a little too old to like the Foo Fighters’ version. And while I’d love to trot out the old saw about only being as old as you feel, when I think about the snow that’s waiting for me at home to shovel, I feel about 55, which I think would put me in the original version’s camp.

One of the stories circulating today and getting lots of play is this commotion over a $500 million investment in Facebook by Goldman Sachs and Russia’s Digital Sky Technologies — an investment which has been extrapolated out to give Facebook a valuation of $50 billion.

“The deal makes Facebook now worth more than companies like eBay, Yahoo and Time Warner,” states NYT’s DealBook.

Maybe so, and certainly makes for great headlines, but strikes us as if they’re jumping the gun. And by the way, that number isn’t new. There’s been a few investors buying Facebook stakes lately that have then been gauged for determining a value for the entire company. TechCrunch in late November trumpeted the $50 billion number, based on secondary market transactions.

Perhaps I’m missing something, but it seems presumptuous and a bit simplistic.

We’ll acknowledge that in the most basic sense Facebook is worth whatever someone is willing to pay for it, and if $500 million gets you 10% of the company, then boom — there’s your $50 billion.

But it’s a bit more tricky than that, isn’t it? The price you pay for a 10% stake isn’t necessarily what you’d pay for the whole kit and kaboodle. Facebook is a private company with limited and highly sought-after shares. Those “pieces” of the company carry a high value, thanks mainly to their scarcity. That doesn’t seem to be a very objective measure of the company’s value.

Say 100 highly coveted paintings by a single artist go on auction all at once instead of just ten. Will each painting fetch the same high prices that they otherwise might if sold in a just a small lot? Don’t know for sure, but simple supply and demand suggests there’s a good chance they won’t.

Let’s see Facebook’s financial statements and a much bigger, easily accessible supply of stock before we decide its valuation is bigger than eBay’s. Maybe it’s worth $100 billion, or $500 billion, for that matter. But let’s allow the market to make that determination instead of hyperventilating media.

My first journalism job came at the Verona-Cedar Grove (N.J.) Times, a small, very small, weekly back in 1991. I was hired as an assistant editor with pay somewhere in the general vicinity of the minimum wage. We had a four-man editorial team, and I was the low-man on the totem pole, meaning I answered the phones, typeset copy, handled the classified ads, I even sold the newspapers at the front desk.

Hey, I was young, I needed a job, and I didn’t have a Columbia J-School degree. They also let me write and take photographs. Even then, pre-Internet, back before the business model got blown to smithereens, it wasn’t exactly a lucrative field. It wasn’t something you expected to get rich doing, or even rich enough to move out of your parent’s basement.

Of course, it was never a lucrative field. Back in the day, before bylines, before J-school, reporting was a trade like any other, and paid like a trade. The operative word in “Ink-stained wretches” is “wretches,” not “ink” or “stained.”

Here’s the honest truth about journalism, least as I see it: the only real reason to do it is because you like pissing people off. The best journalists are always the ones that really like annoying people, hitting them and hitting them and hitting them again until the real story, the big story, is out there. It takes an obsessive personality to be a good journalist. The rest are just writers.

The only thing that’s really changed about the business, too, since I started, is that you can get the news free online now. This is and has always been a rough business. Most journalists give up at some point; don’t get me wrong, talent matters, but getting ahead in many ways is merely a war of attrition. You wait for the guy ahead of you to give up and go into PR. Then you’re the guy ahead of you, and you go into PR. The good ones stay because they’re total news junkies — junkie is a very apt description, honestly — and the bad ones stay because they can’t figure out anything else to do.

Anyhow, enjoy the cartoon. Prospective journalists, beware: It’s actually worse than these cuddly bears make it out to be.

The line of the night on the John Batchelor Show on Saturday came from David Cay Johnston, author of the book “Free Lunch.” We were talking about the tax code, and Johnston was saying there’s $1 trillion lost every year on tax breaks to private corporations, like the ones for the oil industry.

(There was a lot of good stuff Saturday night, by the way. Keep an eye out for the podcast, which should be posted in a few days.)

When people talk about reforming the tax code, they’re going to have to cut through that $1 trillion, and the people who get that money aren’t going to surrender it quietly. They’re going to fight. In the case of the oil industry and other big lobbies, they are fighting.

That’s why they make all those “campaign contributions.” When I pointed out to Johnston that the oil industry gives freely to both parties, he said: “There’s only one party in Washington: the party of the greenback.”

Man, if that ain’t the truth. How easy would it be, in terms of pure mechanics, to scrap the tax code and start over with a far, far less cumbersome, loophole ridden and flatter tax code? Why doesn’t some eager politician propose it?

Because they’re donors would stop taking their calls, and that is what represents a real crisis in Washington.

So rather than proposing a real change that would bring real money into the government’s very really barren coffers, we get token proposals to scrap the mortgage-interest deduction, a proposal everybody knows will go absolutely nowhere proposed on its own like that, but makes the reformers appear to be bona fide. But it’s just the same old game.

Continue reading…

I’m going to be guest host, along with host Aaron Task of Yahoo Finance, on The John Batchelor Show, tomorrow night on WABC radio from 9 p.m.-1 a.m. Guests will include the Times’ Joe Nocera, former car czar (and Andrew Cuomo target) Steven Rattner and Frank Veneroso of Veneroso Associates.

I doubt we’ll get to talk about my fondness for zombie movies and shows, however. Maybe in the 12 o’clock hour, who knows.

Just a programming note, I’ll be on The John Batchelor Show tonight (9-12 a.m., 77 WABC on your AM dial here in the metropolitan New York area,) which tonight is being broadcast live from the Hard Rock Cafe in Times Square, on the corner of 43rd Street and Broadway in the old Paramount Building.

I’ll be on in the 10 p.m. hour, for what that’s worth, talking about the economy. Some of the, ahem, other guests include Larry Kudlow, Charlie Gasparino and Monica Crowley.

Show’s open to the public, first come, first served, so if you’re in the area, come on down. They’re even going to give away an iPad, if you’re into that kind of thing.

- More than 80% of companies that reported earnings have topped analysts’ estimates. But don’t get too giddy. “After all, ‘better than expected’ could simply reflect the low level of the underlying estimates and the strength of the actual data,” Pragmatic Capitalism says.

- Is fresh, massive stimulus via QE2 really necessary? The Reformed Broker blogger Josh Brown isn’t so sure. He notes companies continue to report decent earnings. And more disturbing is the fact that “outside of home prices, inflation is becoming more and more of a reality…The propping up of the dead and the dying via federal spending and zero percent rates is not warranted with markets and prices rebounding elsewhere.”

- On the other hand, the risks of not engaging in QE2 are too great, James Picerno writes at The Capital Spectator. “Calling on the Fed to stand pat risks repeating the mistakes of monetary history,” he says. “We have to deal with the pressing threats as they arrive, and worrying about runaway inflation today is
premature, and perhaps more than a little dangerous. The day for fighting that battle will come. But not now.”

- Credit Suisse notes much of the earnings season move for equities might be over, despite the fact that there’s plenty of reports still to come. “Our Portfolio Strategy team finds the bulk of the impact of earnings on market performance seems to occur in the first two weeks of earnings season, which ends today,” firm says, according to MarketBeat.

- As the reviews pour in regarding Windows Phone 7 devices, so far so good for Microsoft (MSFT). NYT’s Bits blog posts a roundup of reviews. The new lineup of phones are getting “overwhelmingly positive reactions,” blog says. “It’s still unclear if this will translate into sales or make it possible to attract customers away from existing platforms.”

- Hulu’s considering slashing price of Hulu Plus — its subscription service still in beta mode — to $4.95 per month from $9.95, MediaMemo blogger Peter Kafka reports, citing sources.

- Latest iPad rival hits the market. H-P releases its $800 touchscreen tablet computer.

- FCC weighs in on the Cablevision/News Corp dispute over Fox.

- Deal Journal’s Shira Ovide looks at the best and worst deal Apple ever made.

- WSJ profiles the state of Jay-Z’s empire, the rap monger who’s worth an estimated $450 million.