Market Talk

- The multi-year deal pay-cable movie channel Epix and Netflix (NFLX) agreed to is “a major move for Netflix, and undoubtedly a nice cash infusion for Epix, which has struggled to get carriage deals from traditional cable operators,” MediaMemo blogger Peter Kafka says. “This deal may make Netflix more competitive with cable, but it’s not designed to threaten Hollywood’s DVD business.”

- Demand Media filing a $125M IPO at a reported $1.5B valuation shows making it in the online content business is a “long march to the big time,” Kara Swisher writes. “Hence, the IPO, which will give it both cash and stock to use to grow itself, either organically or via acquisition, all while keeping the costs of content creation lower and lower via innovative technology.”

- Small business optimism sharply declines for second straight month. “Businesses and households are losing confidence and are adjusting their spending and investing plans accordingly,” Ryan Avent says. “A chill has settled on expectations around the country. It will take credible policy steps to change the tune.”

- Former Hewlett-Packard (HPQ) CEO Mark Hurd’s severance package, which could be worth as much as $30M, is “appalling,” writes Nell Minow, shareholder activist and editor of The Corporate Library blog. “While most CEO contracts exempt poor performance as a reason for ‘termination for cause,’ there is no reason to permit a departure following an ethics violation to be characterized as a resignation — when the result is a $50 million payout that would otherwise stay in the corporate bank account.”

- Now that Mark Hurd is no longer H-Ps’ CEO, a “dirty little secret” has been revealed about H-P’s business model. “H-P is a sprawling, ungainly conglomerate of tech companies that have only tangential connections to each other and that generate the most tepid of synergies,” writes Kevin Kelleher at AOL’s Daily Finance blog.

- This won’t get the attention of the Hurd departure, but TechCrunch reports the man who designed the Palm Pre has left H-P for greener pastures. Peter Skillman’s exit is the latest in a string of departures from the recently acquired smartphone maker.

- Productivity unexpectedly posted its first quarterly drop in 18 months as output growth slowed and labor costs rose. “If you were looking for one more reason to wonder about the already shaky prospects for a recovery in the labor market, today’s report on second-quarter worker productivity is just the ticket,” James Picerno writes at The Capital Spectator.

- Don’t get too anxious about Google (GOOG) and Verizon’s (VZ) joint proposal: the net neutrality situation still hasn’t changed much, Stacey Higginbotham says at GigaOm. “The good news is nothing about this compromise has any teeth without the FCC deciding to make it part of its official rules on network neutrality.”

- Rail traffic rose 4.1% last month compared to July 2009, but was still 15% lower than in July 2008, Calculated Risk reports, citing data from the Association of American Railroads. “Rail traffic collapsed in November 2008, and now, a year into the recovery, traffic has only recovered part way,” Calculated Risk adds.

- Former Sen. Ted Stevens, along with eight others, die in a plane crash in Alaska.

- “It’s looking like more individual investors just can’t stand being on the sidelines anymore as the stock market continues to rally,” Tom Petruno writes.

- Bullish sentiment is on the rise in recent weeks. But keep in mind “as quick as [investors] have been to embrace rallies, they have been just as quick to abandon them,” Bespoke says.

- As good as recent economic data has been, high unemployment levels should keep investors “very hesitant to erupt in full-throated rejoicing at the turnaround in the American economy,” Free Exchange says.

- Is Newsweek’s cover story touting the economy’s “remarkable turnaround” a contrary indicator, or just plain contrary?

- Europe appears to be heading down a slippery slope.

- Initial jobless claims jumping for a second consecutive week shows the labor market hasn’t quite joined the recovery fiesta.

- Yesterday’s strong retail sales report shows the consumer is finally showing real signs of life. “Even a relative pessimist like me has to admit that recent trends look pretty good,” Tim Duy writes.

- Requiring commercial banks to separate derivatives operations from commercial banking activities looks nice on paper, but Yves Smith at naked capitalism remains skeptical it will solve the systemic risk posed by OTC businesses.

- AAR reports rail traffic rose 7.5% in March compared to a year earlier, which Calculated Risk notes is the first year-over-year increase since July 2008. Sure, it’s a step in the right direction, but recovery in rail traffic still has a long way to go.

- Harbinger Capital discloses it’s purchased 16M shares of Palm. “Somebody, somewhere is going to buy Palm. And they’ll end up paying more for it than the market thinks it’s worth today. That’s the thinking behind hedge fund Harbinger Capital’s bet,” Peter Kafka says.

- Here’s a new one. Obama administration approaches Microsoft (MSFT) about creating a video game about balancing US budget. Erskine Bowles, leader of Obama’s 18-member budget-balancing commission, says the game “would enable anyone with a computer to take a stab at balancing the budget” and would definitely “go viral.”

- “If the bond vigilantes are ready to ride again, there should be little doubt who will be leading the charge,” Tom Petruno says.

- Big buzzword at CES this year is 3-D. But major problem facing TV manufacturers is they have lousy timing.

- Say it loud and clear, it’s a renter’s market. US apartment vacancy rates in 4Q jumped to a 30-year high, while rent prices keep falling.

- Nexus One’s product placement couldn’t be better.

- Apple (AAPL) is looking for new ways to touch its fans. The US Patent and Trademark Office publishes an APPL patent describing touch screens with pixels that both display information and receive touch instructions from the user, according to a blog post on Patently Apple.

- Rail traffic trending in the right direction. “The data continues to reflect a weak recovery, but the trend is positive for now and equity markets have remained robust as the rail data troughed and turned higher,” Pragmatic Capitalist says.

- “One striking aspect of the public debate about the future of derivatives – and how best to regulate them – is that almost all the available experts work for one of the major broker-dealers,” Simon Johnson says.

- Retailers generally reported above-average December sales. Discounters Costco and BJ’s fared well. But Abercrombie lagged behind other teen retailers.

- China unexpectedly raises key interbank rate.

- Believe it or not, GM expects to be profitable this year.