It was a Federal Reserve kind of week, what with the FOMC (Federal Open Market Committee) meeting on Tuesday casting its shadow both before and after, and the market first trying to anticipate what the Fed was going to do and then trying to digest what it actually did (keep rates steady while announcing a bias toward tightening). There was one interesting difference in the most recent bout of Fed-watching, though. Traditionally, the Fed’s adoption of a bias is not revealed until a month after the meeting, when notes on it are released. But Alan Greenspan has decided to loosen the reins a little bit, and if the Fed adopts a bias at a meeting, it will be announced immediately. That gives Greenspan a little more leverage over the marketplace, since he can talk down concerns about inflation without actually touching rates. But even so, this is a welcome step. There’s always been something troubling about the star-chamber-like proceedings of the Fed, with the sphinxlike “The FOMC adjourned at 2:15. There is no other news” announcements and the lack of public disclosure. The closer to open we can get, the better.
Oh, and a bunch of Internet companies went public, and their stocks went up. On to the Chatter.
1. “Loews co-chairman Larry Tisch, who watched 90 percent of a $10 million investment go up in smoke last summer when Long-Term Capital Management imploded, told the Wall Street Journal this week that LTCM wasn’t really responsible for what happened to it. He explained succinctly, ‘There were factors in the market.’ Whew! Thank God! Imagine how disconcerting it would have been had they lost $4 billion without any factors in the market.”
2. “eToys went public Thursday, and as expected, its stock price exploded, ending the day up better than 300 percent. eToys now has a market cap of $8.2 billion, compared with Toys ‘R’ Us’ market cap of $5.2 billion. Don’t you get the feeling that the CEOs of eToys and Amazon.com should get in a flying saucer, land outside the headquarters of Toys ‘R’ Us and Barnes & Noble, and say simply, ‘Surrender now, earthlings. Resistance is futile’?”
3. “Also going public Thursday was high-speed Internet access provider CAIS Internet. CAIS’s stock closed the day up 20 percent, a respectable performance by normal standards, but next to etoys’ showing it’s simply embarrassing. It’s almost as if CAIS wanted people to buy its stock in order to hold it and not immediately flip it. What an unreasonable request.”
4. “Headline of the week, from the New York Times: ‘Weapon Makers Seek Rise in Pentagon Spending.’ God, what’s next? ‘Internet IPO Soars in First Day of Trading’?”
5. “Star Wars–Episode Iopened to dismal reviews and a box office just as impressive as promised, despite the fact that even some diehard fans were disappointed. As one guy, identified for some reason as an Australian, told the Journal, he hated it on first sight, but ’I will like it eventually.’ Perhaps that’s Lucas’ strategy. Make a not-so-good film, so that fans will keep coming back, trying desperately to convince themselves that they’re not feeling let down.”
6. “The Brazilian central bank lowered its benchmark interest rate Wednesday 3.5 percent, the seventh cut since January and one more sign that the devaluation of Brazil’s currency has worked almost exactly as it was supposed to. Most commentators, especially those who love the gold standard and currency boards, had predicted that the devaluation would be a disaster. Oddly enough, we haven’t heard much from them recently. Probably they’re just tinkering with their their theology, like the Millerites who thought the world was going to end on a day in 1845 and when it didn’t decided that they had just gotten the day wrong.”
7. “CVS announced that it would be buying online drug provider Soma.com for $30 million (a paltry sum indeed, as Nathan Myhrvold explained this week Slate’s “Book Club”). Soma.com: what a lovely name for a drug company. What’s next? Lotusland.com? Opiumdreams.com?”
