Randomly Noted

The share prices of Goldman Sachs and Morgan Stanley,  Dow Jones Newswires notes, have nearly doubled since Jan. 1.

Major stock indexes all gained more than 7% in July.

Financial regulation reform, at least for now, has run into rough waters on Capitol Hill.

The New York Times front page reports on the characteristics of the Wall Street creature called the guaranteed bonus.

It all leads one to wonder if last fall’s proclamations about the end of Wall Street as we know it were just that, proclamations. Equities trading and Wall Street writ large (meaning the global securities industry) have shown tremendous resilience. Indeed, it is not completely far fetched to say that part of the stocks rally is perhaps based on the fact people are just psychologically tired of the bear market and the still-weak economy. They are seizing on most anything to drive a different attitude.

Looked at objectively, for instance, the economy still LOST a quarter million jobs last month. Lost, not gained. Still, Friday’s employment report was a rallying cry.

There are more pitfalls ahead. Stocks may return somewhat to earth considering corporate earnings are still mainly based on cost cutting, not revenue gains, and that likely will be the case for a while.

Still, there’s a reasonable case to be made that if the bottom has indeed been reached in the U.S. economy and equity markets, then structural and regulatory changes for the globe’s securities industry may be less pronounced than previously expected.

I’d like to think the Beijing government is embarrassed by the latest twist in the China/Rio Tinto saga.  Here’s what happened: Over the weekend, a local Chinese state-secrets official accused miner Rio Tinto of having committed espionage over several years; the allegations appeared on a website linked to the national agency in charge of protecting state secrets. Specifically, Jiang Rujin, an official in the Jiangsu province secrets bureau, claimed Rio’s alleged actions had resulted in Chinese steelmakers overpaying $102 billion for iron ore imports from 2003 to 2008. You’ll recall that Chinese state security officials detained four Rio Tinto employees on July 5 for alleged theft of state secrets. On Monday, Jiang told my colleagues he hasn’t been involved in the Rio case and culled information for his essay from state media and industry reports. Meantime,  the state secrets administration’s propaganda department said Jiang’s views didn’t necessarily represent the central agency; moreover,  no one was authorized “to release comments…It is his own essay,” the official said. As these folks were backing away from Jiang’s allegations, his article disappeared from the website – China Secret Protect Online – and access to the site was disrupted at least twice. All this added up to a messy muddle ensnaring central and local Chinese officialdom.  From the start, there’s been minimal transparency or due process surrounding the detentions of the four Rio Tinto employees, including Australian passport holder Stern Hu. No charges have been filed despite the prodding of the Canberra government. Moreover, a stream of anti-Rio Tinto by state-run media has heightened tensions. Rio has denied government media allegations its employees engaged in bribery. Innocent or guilty, Rio and its employees would seem to deserve a less retrograde form of treatment by China’s police, judicial and administrative apparatuses. As I’ve written before, it’s not clear this episode will have a chilling effect on foreign companies’ calculations about investing in China. The country’s growing too fast. That said, this will serve to increase multinationals’ cost of doing business in China, and give foreigners much more to mull before diving in. As my colleagues write, the real of state secrets is completely murky, with most evidence deemed “confidential” and trials “held behind closed doors.”