Strike authorization approved: To no one's surprise, union members voted to reject the contract proposals by the three major chains - Vons, Ralphs and Albertsons - and to authorize a strike (Albertsons workers took the strike vote in March). The idea behind these votes is to put more heat on employers, and it's worth noting that a UBS analyst has issued a warning to investors of supermarket stocks about the potential financial dangers of another walkout. "We feel that that there is downside risk to earnings and that investors should remain cautious," Neil Currie said in a note to investors. (S.D. Union-Tribune, AP)
Worries about Bear Stearns collapse: The near-meltdown of two hedge funds at the Wall Street brokerage house is hard to follow - in part because the investment products being bought and sold are so exotic and hard to keep track of. That makes many of them less liquid than, say, a stock that can be easily traded. What concerns many on Wall Street is that hard-to-trade investments may suddenly turn south and set off a broader market downturn. From the WSJ:
Bear Stearns's High-Grade Structured Credit Strategies Fund and High-Grade Structured Credit Strategies Enhanced Leverage Fund ran into trouble when a downturn in parts of the housing market hurt the funds' bets on complex securities backed by subprime mortgages, or home loans to borrowers with troubled credit histories. Such securities trade infrequently, which makes it hard to sell them quickly without incurring steep losses. The funds, especially the Enhanced Leverage Fund, used borrowed money, or leverage, to amplify returns. But leverage also amplifies losses when a fund's bets go sour. Investors with plenty of cash on hand, thanks to years of low interest rates, have flocked to illiquid investments in search of outsize returns, often with the help of borrowed money. Some market experts worry that investing in illiquid assets, despite their inherent risks, has become almost mainstream.
Sequel fatigue: Lots of coverage on the lackluster opening weekend numbers for Universal Pictures' "Evan Almighty" - $32.1 million vs. $67.9 for the original "Bruce Almighty." But it’s not alone – most of the sequels out this summer have been struggling. "Spider-Man 3," "Shrek the Third" and "Pirates of the Caribbean: At World's End" are all expected to fall short of the previous release. Meanwhile, original fare like "Knocked Up," which cost less than $30 million to make, has hit the $109 million mark in the U.S. after four weeks. Box office revenues are up about 3.5 percent year-to-date, but theater attendance is flat, movie tracking analyst Paul Dergarabedian told the WSJ. (NYT)
NYT's Rupert Murdoch story: The very long and eagerly awaited piece focuses on News Corp.'s influence on Washington - and if you've been following Murdoch over the years, there's not much that will be surprising. As for the current effort at buying Dow Jones, all the usual suspects say all the usual things - either he'll use the editorial side of the WSJ to exert his global clout or he won't. Even Murdoch’s overtures to Democratic candidates, most notably Hillary Clinton, are hardly new material. Which raises the obvious question: What was this about? Full story here. Synopsis below:
His vast media holdings give him a gamut of tools — not just campaign contributions, but also jobs for former government officials and media exposure that promotes allies while attacking adversaries, sometimes viciously — all of which he has used to further his financial interests and establish his legitimacy in the United States, interviews and government records show. Mr. Murdoch may be best known in the this country as the man who created Fox News as a counterweight to what he saw as a liberal bias in the news media. But he has often set aside his conservative ideology in pursuit of his business interests. In recent years, he has spread campaign contributions across both sides of the political aisle and nurtured relationships with the likes of Bill and Hillary Clinton.
An analysis of campaign finance records shows that since 1997, Republicans have received only a slight majority — 56 percent — of the $4.76 million in campaign donations from the Murdoch family and the News Corporation’s political action committees and employees. Since Democrats won control of Congress in the 2006 elections, the company and its employees have given more than twice as much to Democrats as to Republicans, the records show.
Is Macy's for sale?: That was the talk over the weekend - specifically, a private-equity buyout by Kohlberg Kravis Roberts & Co. and Goldman Sachs Group Inc. Trading in call options to buy the company's shares surged to more than 35 times the 20-day average. No comments all around. Macy's, formerly known as Federated Department Stores, has had some trouble digesting May Co. (which included Robinsons-May). This might have been a false alarm because shares of Macy’s are down more than 1 percent this morning. (Bloomberg)
U-Haul Series: The LAT continues its ambitious (and overlong) investigation into the supposed misdeeds at the nation's largest do-it-yourself moving company. Today the focus is the questionable maintenance practices. The paper found that more than half of the 200 U-Haul trucks and trailers it surveyed were overdue for a company-mandated "safety certification," a check of brakes, tires and other parts typically required every 30 days. Some safety checks were more than a year overdue. U-Haul says its fleet of more than 200,000 vehicles is safe and well-maintained and that it's investing heavily to modernize the fleet. The company also says its trucks are involved in fewer than four accidents per million miles — about the same as a federal estimate of the accident rate for all passenger vehicles. The rate for trailers is even lower, though there's no government agency keeping track of this stuff.
U-Haul relies on a far-flung network of independent dealers to supplement its 1,450 company-owned rental centers. This has added to maintenance problems. Most of the 14,500 dealers have no auto service background. They include storage sites, mini-marts, postal supply shops, even liquor stores and laundromats. Further complicating matters is U-Haul's practice of booking reservations without knowing if it will have trucks and trailers when and where renters want them. The policy leads to long lines of overwrought customers, creating pressure to get equipment back on the road quickly.
Register parent downgraded: Standard & Poor's Rating Service has cut the credit rating of Irvine-based Freedom Communications Inc. to "negative" from "stable." Three years ago, Freedom's family owners sold a near-majority stake to private equity investors Blackstone Group and Providence Equity Partners. Freedom now has an option to buy a portion of the stakes held by Blackstone and Providence. In 2009, the investors have the option to sell their entire stakes to Freedom. That would mean more borrowing, which helps explain the downgrade. (OC Business Journal)
Pixar takes charge: Last week's Disney restructuring gives Pixar's John Lasseter and Ed Catmull control over all Mouse House feature cartoons. It also represents a shift in the home video strategy, which up to now has been largely focused on releasing sequels like "Cinderella III" and "Lion King 1˝" straight to video. The features, while cheap to make, weren't very good. Now, Lasseter and the other Pixar folks are moving away from those animated sequels. (Variety)