Monday morning headlines

Stocks edge higher: The Dow was up almost 100 points in early trading, but don't get your hopes up. The oil experts are pondering $200-a-barrel oil before the end of the year, and even if that doesn't happen (seems unlikely), there's little sign that the bear market is about to turn bullish anytime soon. Averaging out the post-World War II bear markets, Barron's notes that stocks would have another 118 days to go before they turn upward. The shortest turnaround was in 1987, when the bear market lasted just 101 days. The longest was 1973-74, which took 630 days.

"We are still in the super bear of 2000," asserts Jeremy Grantham, chairman of money manager GMO. In a bear market, stocks fall back to, or below, their long-term trend line. But after the great bull market from 1982 to 2000, equities never flushed out their excesses "because of the Greenspan-inspired chain of bubbles, from growth stocks to real estate to commodities," referring to former Federal Reserve Chairman Alan Greenspan. "Great bear markets always take their time, and the most likely end is 2010," Grantham continues. If the S&P 500 were to fall to 1100 in 2010, that would be about a 13% decline from here, about 1263, and would put the index back on its long-term trend line.

$200 oil?: That would push gas prices to well over $6 a gallon (perhaps closer to $7 in California) - and it could happen, say some of the experts. Of course, it might not happen, too. The trend line is almost impossible to figure out, what with all kinds of cross currents battering the markets. For what it's worth, it's down almost four bucks this morning, to around $141 a barrel, in part because the dollar is higher. From the WSJ:

The list of forces shoving prices upward is long: a weak dollar driving hot money into commodities; jitters over a possible military conflict with Iran; soaring costs and chronic project delays in the world's oil patch; concerns over scarce supplies and long-term production declines; and continued robust demand growth in much of the developing world. Oil ministers and top petroleum executives have added to the alarm. Paolo Scaroni, head of Italy's biggest oil-and-gas company, Eni SpA, told an Italian newspaper last week that he could see prices hitting $200 a barrel this year.Chakib Khelil, president of the Organization of Petroleum Exporting Countries, predicts that crude could go as high as $170 a barrel this summer.

GM mulls layoffs: The giant automaker wants to return to profitability by 2010 and the money has to come from somewhere. Among the moves being considered are cutting thousands of additional white-collar jobs and dumping more of its brands. All but Cadillac and Chevy would be considered, according to the WSJ.

LAX work may slow: Almost $1 billion worth of bonds are expected to be sold this month to help finance the first round of improvements. But Gina Marie Lindsey, director of Los Angeles World Airports, cautioned that "if airline growth continues to moderate, we might have to push back some of our long-term projects." That includes a mid-field concourse and reconstruction of the two runways on the north side of the airport. LAX will probably fare better than the smaller airports because its traffic is increasingly coming from overseas - and that remains a growth area. (LAT)

Countrywide workers to lose severance?: That's the big concern among senior level executives of the mortgage giant, which was taken over by Bank of America. The NY Post reports that BofA has the power to decide whether it wants to pay severance benefits to an employee who turns down a new position. Countrywide workers suspect that BofA will offer them inferior positions with big pay cuts to force them to quit and forgo severance.

Drug business sold: APP Pharmaceuticals, which has been the handiwork of L.A. billionaire Patrick Soon-Shiong, is being sold to German medical supplies provider Fresenius SE for $3.7 billion, plus the assumption of $940 million in outstanding debt. APP is based in Illinois and publicly held, but Soon-Shiong controls more than 80 percent of the outstanding stock. He recently stepped down as CEO to focus on L.A.-based Abraxis Inc., which makes the cancer drug Abraxane. APP makes injectable drugs for cancer, infections, anesthesia, pain and critical-care. (LAT, LABJ)

Writers wages mixed: Guild members working on features did very well for the year ended March 31, with earnings jumping almost 16 percent. There was a bunch of extra work in the months leading up to the strike - and now in the months after the walkout. TV writers saw their earnings slide 6.8 percent; they were hit harder by the long walkout, though many of them are catching up this summer, a period that is normally quiet. All told, earnings for writers rose 4 percent. From Variety:

The WGA noted that smallscreen earnings were the lowest in three years and that employment was the lowest in 11. "Though exaggerated by the strike, this decade-spanning low employment level nonetheless reflects the recent history of contracting TV employment," the WGA said. "The decline is largely attributable to the emergence of primetime reality TV, which uses fewer writers than primetime series and is often not covered by the WGA contracts. In addition, the relative popularity of hourlong formats, especially drama, is a negative factor in employment compared with half-hour formats, which more than double the number of writers per hour of television produced." The guild forecasted that some of the lost 2007 earnings will be recovered this year, but it added that 20% of episodes intended for the 2007-08 season won't be produced or will be deferred to the 2008-09 season.

Waiting for AFTRA results: We should know in the next few days whether members of the American Federation of Television and Radio Artists ratify a new contract with the studios and networks. If the vote is a strong yes, it would put pressure on the Screen Actors Guild to strike a deal of its own. Meantime, SAG took out a full-page ad in the trades that asks its members to support the leadership's efforts at getting a batter deal. (THR)

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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