Stocks looking good: It's early but the Dow is up about 75 points after 90 minutes of trading. One explanation being thrown around is all the unresolved M&A activity (largely fueled by private equity money) that always helps prop up the market. The Federal Reserve meets tomorrow, but the betting is that rates will remain where they are.
Big bird arrives: A huge crowd is expected for this morning's touchdown of the eight-story Airbus A380 at LAX. They're calling it the biggest airport spectacle since the Concorde cruised in 33 years ago. Around the same time the 555-seat passenger jet is expected to arrive from Toulouse, France, another A380 will be arriving at NY's JFK. You may remember the flap over Airbus reneging on a commitment to first land in Los Angeles and then deciding to have one plane go to L.A. and one to NY. Of course, it's anyone's guess when actual service will start; production has been delayed because of various mechanical problems. ETA this morning is 9:30, and on a slow news morning you should expect over-the-top coverage.
New Century news: A bunch of more states, including Connecticut, Maryland, Rhode Island and Tennessee, have issued cease-and-desist orders that restrict the OC lender from taking new applications for mortgage loans. The step is sort of moot because New Century is not in any position to be lending more money. There's still no word on New Century's fate (bankruptcy or sale would seem to be the obvious possibilities), but the WSJ reports that Frederic Forster, the company's outside chairman, has set up shop at New Century's Irvine office. Directors aren't running the company, a source told the Journal, but "counseling management on a real-time, 24/7 basis." From the WSJ:
Independent board members typically provide oversight and monitoring of a company, while managers run operations. But when a crisis erupts, as at New Century, such directors increasingly are assuming a more hands-on role. Stronger governance standards adopted following corporate scandals -- and the prospect that directors could be held personally liable -- reinforce the trend. "Your wealth is at stake, and your reputation is at stake," says Charles Elson, head of the Weinberg Center for Corporate Governance at the University of Delaware's business school, who also serves on two public-company boards. As a result, "the line between directors and managers is getting a little more blurry than what it has been," says David Larcker, a professor at Stanford University's Graduate School of Business.
Tracking L.A.'s subprimers: They're largely in the county's poorest ZIP codes: Willowbrook, Pacoima, Watts, San Fernando. No big surprise there - lower-income folks were especially vulnerable to the come-ons of no downpayments and minimal monthly payouts. But according to the Business Journal, subprimes accounted for at least 10 percent of the loans in another 107 neighborhoods. That includes Woodland Hills, Pasadena and Whittier. The numbers, however, are very slippery because the paper did not have access to loans issued by Countrywide Financial and Wells Fargo, which are huge players in the subprime business and can skew things significantly. Actually, lots of slippery numbers have been thrown around these last couple of weeks, so figuring out what it all means is very tough.
Hollywood's new model: The Wall Street and hedge fund money being used to start up movie production companies isn't a great bet, according to former MGM exec Chris McGurk, who has just launched Overture Films. McGurk told the Economist that three-quarters of the newly financed operations will be gone within five years. The problem is not funding, but, as always, the capricious nature of the business (along with airlines, movie-making is truly the worst possible place to put your money).
The film industry's real problem, says John Sloss, a consultant, is not so much a shortage of films as a shortage of eyeballs. Getting movies to the screen and the DVD racks, and persuading people to see them, is the tricky part. Here the established studios have a huge advantage. They have global networks and legions of marketing men—and can attach their trailers to blockbusters.
Speaking of Hollywood: As you might recall, CBS and Warner Bros. had some serious ratings problems with their mini-networks UPN and the WB. So they decided to merge them into the CW (first initials of CBS and Warner Bros., get it?) and guess what - serious ratings problems. Six months after being launched, the network has yet to turn a profit. So with the upfront ad buying season fast approaching, the CW folks are looking to jostle the lineup. From the ">WSJ:
Among the network's pilots are dramas about a girl witch and a 21-year-old slacker whose parents sell his soul to the devil. A comedy, "Dash for Cash," is set behind the scenes of a fictional reality show -- and one character leaves each week as they get voted off. Many series under consideration have plenty of product-placement opportunities. "Gossip Girl," for instance, tells the story of privileged New York City teenagers and their high-society parents through the eyes of a tell-all blogger whom nobody can identify. Characters email gossip to the blogger via their T-Mobile Sidekicks -- a tailor-made product placement. T-Mobile hasn't been involved in the creation of the show, but a CW spokesman says it will likely reach out to the company if the show gets a spot on the fall schedule.Ports and the economy: It's further evidence that the American consumer has an insatiable appetite for stuff. Through the first two months of 2007, combined container traffic at the ports of Long Beach and L.A. increased more than 12 percent from a year earlier. Economists expect another 10 percent in March, which is typically one of the weakest months for shipping. Economists initially forecast increases of between 5 and 7 percent; they're now looking at 8 percent or more. Press-Telegram