Market Talk

I remember the first time I saw “Star Wars” like it was yesterday, even though it was the summer of 1977. Every kid who saw the movie that summer does. There’d never been anything like it before. It even blew away Star Trek reruns. Everybody I knew wanted to be Han Solo or Luke Skywalker and every girl wanted to be Princess Leia. Maybe some real contrarians wanted to be Darth Vader, but nobody wanted to be one of those nameless Imperial soldiers in those vaguely Nazi-like uniforms.

According to Josh Brown, though, that’s exactly what we are.

Brown, over at the Reformed Broker, aligns the financial blogosphere into the Star Wars universe in his now-annual rundown. Seeing as who employs us, we were put into the “Death Star” group, along with Floyd Norris, MarketBeat, Alphaville and the Curious Capitalist. It’s all the mainstream media players, basically. Okay, I get it. But that makes us the bad guys.

We should be happy just to have made the list. We didn’t make last year’s version. And I’m certainly not going to quit my job just to be with the cool kids in the Rebel Alliance group, where Brown, ahem!, puts himself. But I never imagined myself as the kind of guy who’d sneer “you rebel scum.”

But, hey, if I only knew the power of the Dark Side.

Universal Travel Group (UTA) shares meandered between positive and negative territory Thursday as investors digested a blogger’s claim of fraud against the tiny Chinese company.

Universal Travel dropped 19% on Wednesday and was the biggest decliner on the New York Stock Exchange, prompted by John Hempton, an Australian fund manager and blogger, who alleged that the online booking and travel company may be committing fraud. On Thursday, shares fell as much as 6.7% before bouncing back into positive territory. The stock, however, fell again recently, down 1.6% at $3.80.

In a 5,500-word blog post, Hempton described his troubles booking flights and hotels through the website and questioned the company’s accounting, suggesting its results are unsubstantiated. He also disclosed he’s shorting Universal Travel Group, a strategy investors use to profit from a declining stock price.

“It looks like this travel site is all front end, no-back end — there is no actual booking, no mechanism of collecting payment — no nothing really,” Hempton wrote on his “Bronte Capital” blog.

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- “Betting against the American consumer is one of the biggest mistakes Wall Street bears have made this year,” Tom Petruno says.

- No one wants to back down in this Apple/Adobe tiff. Adobe CTO Kevin Lynch offers his two cents in a blog post. And Adobe CEO Shantanu Narayen sits down with WSJ’s Alan Murray and fires back at Apple. Here’s Jobs’ lengthy missive posted yesterday on Apple’s website.

- Yahoo (YHOO) CEO Carol Bartz tries to downplay the recent exodus of executive talent. But BoomTown blogger Kara Swisher begs to differ. “The continuous brain drain is perhaps the company’s most profound dysfunction.”

- Economy has been expanding for three consecutive quarters, but the overall picture remains mixed, The Economist’s Free Exchange blog says. “Growth is clearly better than no growth. But there are real concerns with the composition of output.”

- GDP growth at 3.2% should confirm the recession’s over. But delving deeper into the details shows the report’s not quite so rose. “But I suppose an optimist could see in all this the potential for much better numbers to come once the recovery gets on track,” James Hamilton writes.

- The new GM’s back and its poised for success. At least that’s the message Vice Chairman Bob Lutz relays on GM’s FastLane Blog today, which marks his last day at GM. “I only have about 47 years of experience on which to base this opinion, but I believe GM is poised to win.”

- “Was Goldman a badder bank than other banks? No. Did other firms put their own free-wheeling interests before those of their clients? Yes. Is Goldman now a victim of its own, home-grown, blinding arrogance? Absolutely,” FT’s Alphaville says.

- “Google is going to have a problem because Google is only known for search,” Yahoo CEO Carol Bartz tells BBC. “They’ve got to find other things to do. Google has to grow a company the size of Yahoo every year to be interesting.”

- In the wake of Microsoft (MSFT) shelving plans for its two-screen, tablet-style device, is Hewlett-Packard (HPQ) also stopping the development of its tablet computer? That’s what Michael Arrington alleges at TechCrunch, citing a source who has been briefed on the matter.

- The Kentucky Derby looks even more wide open than ever this year.

- Score one for Volcker. The fact that Obama named his bank-regulation plan the “Volcker Rule” is a major victory for the former Fed chairman, former IMF chief economist Simon Johnson says.

- Yves Smith says plans to limit prop trading “sounds well and good,” but she’s also skeptical. “Given how derivatives reform was gutted and health care reform was botched, what do you think the odds are that something with teeth will be voted in?”

- Seems a bit odd NY Times will wait a year before implementing its metered pay system, but MediaMemo blogger Peter Kafka reminds that building pay walls involves some work.

- Of course just because NYT models its pay wall after the FT’s doesn’t mean it’s going to be successful. FT’s coverage is more unique and specialized than New York Times and folks subscribing to business-oriented sites are more likely to expense their bills, Newsosaur blogger Alan Mutter says.

- Check out one of the latest additions to the blogosphere and twitterati. You may have heard of him.

- Goldman Sachs’s (GS) compensation ratio for 2009 dropped to an all-time low of 36% of revenue. That compares to 62% for Morgan Stanley (MS). But Reuters blogger Felix Salmon wonders if Goldman’s lower comp is sustainable or just a on-off.

- Two ways to view today’s unexpected rise in jobless claims: economy’s prepped for a fresh round of trouble or the recovery will take longer than expected and “deliver subpar performance for an unusually long time,” James Picerno writes at The Capital Spectator.

- Amazon (AMZN) wants to have an app for that, too. It plans to open the Kindle up for developers to make “active content,” That likely means apps, although Digital Daily blogger John Paczkowski notes Amazon refrained from using that word in its press release.

- Regional banks traded higher while the banking giants plummeted. “Wall Street clearly sees the smaller players as winners if Obama succeeds in reining in the titans,” Tom Petruno writes at LA Times’ Money & Co. blog.

- Apple (AAPL) sees new money in old media. CEO Steve Jobs is betting the tabled can reshape textbooks, newspapers and TV much the way his iPod revamped the music industry.

In the War of Wealth, everybody loses.

The Financial Accounting Standards Board agreed to ease their mark-to-market accounting regulations, and while the market appears to like it, other observers are more skeptical.

Perhaps hostile is the better word.

Banks have been howling that the accounting rules have unfairly pushed down the valuations of their assets since the onset of the downturn. But supporters think mark-to-market gives investors a fair assessment of what assets are worth and changes would allow banks to overvalue their assets.

The Dow Jones Industrial Average gained more than 300 points in earlier trading as the financial sector praised the plan, but bloggers have met the rule changes with trepidation, noting the unintended consequences of the reforms and a lack of trust surrounding the banks.

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Lots of eyebrows raised after the New York Post’s story today detailed some of Citigroup (C) and Bank of America (BAC)’s recent aggressive trading moves.

Both banks are reportedly buying mortgage-backed securities in the secondary market at a premium to what hedge funds and other investors are willing to pay. A source told the paper that the banks’ purchases have helped keep prices of these toxic assets higher than they would be otherwise.  Continue reading…

Former bond trader John Jansen says he’ll begin charging users in mid-April for some of the content on his blog, joining a growing list of financial bloggers and websites that aren’t giving away their goods for free anymore.

Bespoke Investment Group and Footnoted are a couple other examples of financial blogs offering premium content for a fee in conjunction with free material. Minyanville is also a financial website that offers several premium packages.

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Lots of chatter surrounding Sen. Benjamin Cardin’s (D-Maryland) bill that would restructure ailing newspaper companies into non-profits with a variety of tax breaks.

Cardin’s plan hasn’t yet attracted co-sponsors, but it has sparked the interest of many within the media, according to Reuters. The plan would give newspapers similar status to public broadcasting companies. They’d be able to report the news as they usually do, but would be restricted from making political endorsements.

Media observers, however, are skeptical such a plan would actually be in the newspaper industry’s best interests. Alan Mutter, managing partner of Tapit Partners and author of the Reflections of a Newsosaur blog, notes the St. Petersburg Times and Christian Science Monitor are two newspapers already owned by non-profits that are struggling.

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The notion that taxpayers will ultimately benefit from Treasury Secretary Tim Geithner’s toxic-asset plan seems naively optimistic.

Andrew Jeffery, an editor at Minyanville, notes the government tried to reassure taxpayers six months ago they would profit during the rescues of Fannie Mae (FNM) and Freddie Mac (FRE). But with delinquencies on prime loans increasing and home prices tumbling, losses are likely to keep growing — as will the taxpayer’s obligation, he says.

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