It was a short week, but a week dominated by fear that the economy is too strong and the rising sense of certainty that the Federal Reserve will raise interest rates at its next meeting. In the long run, of course, the stock market wants the Fed to tighten the money supply if that’s what’s necessary to curb possible inflationary pressures, because if the Fed doesn’t do that, long-term interest rates will rise–as bondholders demand more protection against inflation–and stocks will become less attractive. But in the short run there’s just a lot of pain. We all want to believe we’re living in an Era so New that inflation is eradicated, and being reminded that we don’t seems to have made investors a little melancholy. Not panicked, just listless and unhopeful. Probably not a bad thing after so many months of exuberance, rational or otherwise. And so, on to the Chatter (which is neither melancholy nor listless)!
1. “Suharto, the former president of Indonesia, is suing Time magazine because it claimed that he has a multibillion-dollar fortune hidden overseas. ‘Time cannot provide solid proof,’ Suharto said. ‘Therefore I think the story is false.’ He thinks it is? Wouldn’t you know if you were a multibillionaire? More important, wouldn’t you know if you weren’t?”
2. “Even though their audiences keep getting smaller, the major networks saw upfront spending on prime-time advertising rise 17 percent over last year. I believe this is what’s called sending the wrong message.”
3. “The Fashion Cafe, which sought to build an entire business around the idea that people will pay high prices for bad food if they think models will be eating in the same room with them–OK, the idea was that men would pay these prices–declared bankruptcy last week, saying it had $2.5 million in liabilities and $1.9 million in assets. God only knows what that list of assets included. ‘Three B-list models … a picture of Daniella Pestova … some silverware.’ “
4. “Wall Street Journal headline: ’Adobe To Cut 250 Jobs and To Invest Savings in Internet Programs.’ How long before we get this one: ‘Adobe To Cut 250 Jobs and To Invest Savings in Internet Stocks.’ “
4a. “Actually, given the recent sell-off, it could be a long time.”
5. “Barnes & Noble called off its proposed acquisition of book wholesaler Ingram after the staff of the FTC recommended that the deal be blocked on antitrust grounds. B&N is said to be contemplating spending the $600 million it would have spent on Ingram on a giant warehouse to be built right across the street from the FTC.”
6. “Texaco rejected a proposed merger with Chevron, saying the offering price was too low. The head of Chevron expressed surprise, saying that he didn’t understand why Texaco shareholders wouldn’t want ‘Chevron stock, with its acknowledged strong growth prospects.’ Of course, if Texaco shareholders want Chevron stock, they could, well, just go out and buy it.”
7. “In an e-mail mentioned in the Microsoft antitrust trial yesterday, a Sun Microsystems executive referred to the incorporation of Java into AOL’s Web browser as a way of breaking Microsoft’s ‘deadly embrace.’ Deadly embrace? What’s next? ‘This nefarious scheme must be foiled’?”
7a. “Microsoft entered as evidence an e-mail from one of its employees calling the competitive landscape a ‘very scary thing.’ It probably would have been better if he had written, ‘It’s a very very very scary thing. I can hardly tell you how scared I am. I’m telling you, the hairs on the back of my neck are standing up. It’s almost as scary as Psycho. The original Psycho, that is. Well, not that scary. But still pretty damn scary.’ “
