TAM Money and Finance

Fed Chairman Ben Bernanke is starting to get the same love as Alan Greenspan. When he talks like he did before the House of Representatives that inflation wasn’t a threat to the economy stocks soared to an all-time high.

Congress is also giving the Fed Chairman some of that love which may play into his goal of pushing the central bank toward inflation targeting:

Several common themes have emerged from the hearings. First, Mr Bernanke’s decision to halt rate rises in the summer of 2006 has earned him political capital as a Fed chairman who considers seriously the dual mandate to put equal weight on employment and inflation, and not inflict harm lightly on the real economy.

Mr Bunning, who opposed Mr Bernanke’s confirmation, said: “The Federal Open Market Committee did the right thing by stopping the increases in the Fed funds rates after the June 2006 Fed meeting. By holding rates constant, you have done the right thing ever since.”

Second, his modest, plain-speaking manner, which stands in sharp contrast to that of Alan Greenspan, the previous chairman, is going down well with Congress.

Melvin Watt, a Democratic congressman, said: “I happened to like your predecessor. Problem was I didn’t understand a damned thing he ever said – so you are a breath of fresh air.”

Third, Mr Bernanke is showing a surprising degree of political savvy, positioning himself shrewdly in the debates of the moment, which hinge on inequality and middle-class economic anxiety, and moving to meet a desire for greater public accountability at the Fed.

All this could help Mr Bernanke change the way the Fed operates, above all the adoption of a flexible inflation target with a specified inflation goal but one that would not be achieved over a fixed timeframe. Conventional wisdom has it that the Democratic victory last November and the broader mood of economic populism in the air make this an uphill struggle.

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During the Christmas shopping season it was understandable to have trouble finding a Nintendo Wii. It was brand new, had a cult gamer following, looks fun to play, and even the best companies have trouble making enough product to meet huge early demand. We’re now a few months after the Wii’s debut and people are still having trouble finding the machine.

First, Faisal Laljee at SeekingAlpha:

I visited no less than 6 stores on Monday night - EB Games, GameStop (GME), Best Buy (BBY) and Target (TGT). None of them had the Wii in stock. I spoke to one of the employees at GameStop and he told me that they get Wii shipments from time to time, but the units sell within minutes. Talk about demand.

Next, Eric Savitz at Barrons.com:

I was looking for an excuse to rant about my Nintendo Wii shopping experiences and now I have one. In that note I just mentioned from Citigroup’s Bill Sims about a walk-through of a Best Buy (BBY) store in Orlando, the analyst mentions that due to huge demand for the Nintendo Wii, the retailer is “struggling to keep them in stock.”

Yeah, I’ll say.

He found one for an inflated price on Craig’s List.

In contrast Laljee said a GameStop employee informed him Playstation 3 machines were “stacked up in the back.” Don’t feel too sorry for Sony they’re getting record pre-orders in the U.K. Let’s see if they can deliver.

It took a few days but Wal-Mart (WMT) finally put up a page letting non-Internet Explorer users know their beta movie download service doesn’t work with their browser. This post got lost in the queue but I wanted to let Firefox users who haven’t bothered with the movie download service to know they still shouldn’t bother.

Previous coverage:

• “Wal-Mart Hates Firefox…for Now”
• “Wal-Mart Goes into the Movie Download Business”

When we think of Google (GOOG) we think of super-fast web searches, internet advertising, and a business culture that views itself as different from the rest of the industry. What’s happening in North Carolina takes some luster off the benevolent image of the “Do no evil” company. Nicholas Carr has put together two link-filled posts that detail Google’s work with state and local officials to get land and tax breaks for building a facility employing 200 people. After reading them Google looks like any other company only a stock market and technology darling.

The private equity/hedge fund player Fortress Investment Group (FIG) gave life to the IPO markets Friday with shares almost doubling.

Will we see more hedge funds hit the U.S. stock markets? With Fortress’ good start the answer is yes. Just don’t expect a flood of them:

But experts noted that only the most established hedge funds, with multiple trading strategies and a history of trading success will tap the public markets.

“No one is going to be interested in doing an IPO for a $500 million firm,” said John Van, chief operating officer of Greenwich Alternative Investments, a hedge fund research firm. “A company would have to have billions of dollars for an IPO to make sense.”

Hedge funds like public markets because their capital source is more stable. Stockholders can buy and sell their shares on the open market instead of pulling their money out of the fund once a quarter.

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The Big Picture has fun at HSBC’s (HBC) expense by asking what the four letters stand for. There are plenty of funny ones in the comments. Here are four of mine:

• Hey Sub-prime Brings Crying
• Hot Scene Becomes Cool
• Heady Schlock Becomes Crutch
• Here Smart Bank Clunks

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Pouring through this week’s Carnival of the Capitalists hosted by Mighty Bargain Hunter here are the posts you need to read:

• Those interested in retail stocks will like Nellie Lide’s “Shopping Trends for 2007.”
• Photon Courier lets us know that ethanol can’t be moved via pipeline which means plenty of business for railroads.
• Many people think more money will make them happier. Free Money Finance offers an easy solution: spend less by budgeting.

With names like Blackstone, KKR, Carlyle Group, and Texas Pacific private equity firms are the black bodies of the financial world. Just by looking at their names you don’t know what business they’re in. You don’t know what they do, what makes them powerful and feared. They radiate dark energy while allowing few to know the source or the means of its production. About the only entity more nebulous is the hedge fund, but with Fortress soon to go public they don’t mind as much attention.

Private equity firms would just like to raise billions, buy companies, pay off the debt, and sell the companies without the distractions from newspapers, interest groups, and–yes–weblogs. Unfortunately for them when they amass huge sums of money and buy anything from Australia’s Qantas to the Minneapolis Star Tribune to Burger King you’re going to get noticed. Even more attention will be drawn to the industry if Bain Capital founder Mitt Romney stakes a firm claim to the 2008 GOP Presidential nomination.

Some in the U.K. are in a tizzy (is that a British term?) over three private equity firms buying the J Sainsbury supermarket chain. It’s brought into the open the voracious appetites of these financial powerhouses. In Davos, Switzerland at the recent World Economic Forum Phillip Jennings of the UNI global union wailed, “They are like a global vacuum cleaner hoovering up assets at any price, anywhere, any time and we want to bring them out of the shadows.” Critics complain about the firm’s modus operandi: borrowing lots of money to buy companies, either selling off pieces or using the company’s cashflow to pay off the debt, then selling the company to someone else (like another private equity firm as in the case of Network Solutions) or taking it public. What they ignore is Professor Christoph Zott’s view that “taking a company private can shield it from the short-term pressures of public markets.” A private company missing its quarterly earnings expectations doesn’t risk massive investor panic.

In the U.S. there’s a similar unease with private equity firms:

As private equity moves further into the public spotlight, investors are also starting to express wariness over buyouts.

Shareholders of Clear Channel are set to face off with the company’s board next month over the proposed $26.7 billion buyout of the radio station owner - one of the biggest buyout deals announced last year.

“Shareholders are more aware on a whole range of issues affecting the capital markets today than they have been in the past and the new force of private equity is one of them,” said Eleanor Bloxham, president of the Value Alliance, a group that advises companies on corporate governance.

Private equity players say the industry’s negative reputation isn’t justified and attribute it to a lack of public understanding. They argue that in many cases companies can execute better in private hands, when they don’t have to focus on delivering quarterly results to Wall Street.

In addition, they say that shareholders benefit since they receive a premium on their stock when a deal closes. And unlike in the past - when private equity firms were viewed as corporate raiders intent on stripping firms - now more public companies are welcoming private equity.

“By and large, most of the private equity transactions have been friendly,” said Mitchell Hollin, a partner at private equity firm LLR. “Public boards always have the ability to say ‘no.’ It’s really their decision to say ‘yes’ that has allowed for these successful transactions.”

Some firms are looking at building consolidated online marketing companies. If they do they could give them a little business immediately by improving their industry’s reputation.

One company that turned off from private equity is Morgan Stanley who is trying to raise $6 billion for a new fund. They were tired of Goldman Sachs having all the fun.

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What does Wal-Mart (WMT) have against Firefox? I showed earlier their new movie download service on the open-source browser looks like something produced by an IBM Selectric on LSD. It looks just as bad on Firefox on the Mac. (The comparison is better understood if you are on LSD as well or weed.) At first look I figured it was just a glich–a HUGE glich–with the Wal-Mart beta. But the retailer has had all day to fix it. Nothing’s happened. Michael Arrington quotes a web designer, “I could fix this in 30 seconds. Did they even test this in Firefox before launching?”

To appreciate Wal-Mart’s efforts you need to fire up Microsoft Internet Explorer. With it the movie download sight looks like, well, the Wal-Mart website.

One of TechCrunch’s commenter told Firefox users to do a hard refresh of the web page (shift-control-R). That does the trick, but Wal-Mart’s had all day to fix this. At the least they could put up a redirect to a page saying the beta site works only with Internet Explorer. A Google beta this is not.

Gizmodo questioned Wal-Mart about the service. The company emphasised the service is a beta and it’s a chance for them to feel things out at the beginning of a downloadable media world.

So what does Wal-Mart have against Firefox? Nothing. Things are just a work in progress.

Wal-Mart’s new endeavor gets an Om Malik beating calling it another in a long line of “too many me-too download services out there, muddying the waters and confusing the consumers about which movie or television they can download from where, and why.” Om thinks the winner won’t be Wal-Mart shareholders by Steve Jobs.

IDG News gives us the techy scoop on how and who brought the movie download site to life:

The offering is built on HP Video Merchant Services, a Web-shopping technology also launched Tuesday that allows businesses to set up an online video store. HP holds hundreds of petabytes of digital films and TV shows in its data centers, and provides back-office sales and search applications, said Willem de Zoete, vice president and general manager of Digital Entertainment Services at HP.

Customers like Wal-Mart use the service as part of their online retail offerings, allowing cinema fans to browse movies based on genre, or search by entering the name of an actor, director or film. Customers can then download the movies to play on their PCs or portable video players, or order a packaged disc to arrive in the mail, choosing a DVD, HD-DVD or Blu-ray format.

A first-time user must install a program on the PC before starting the 30- to 45-minute process of downloading a 1.5G-byte movie over a typical household broadband connection, although most can start watching within five to 10 minutes, said Kevin Swint, Wal-Mart’s divisional merchandise manager for digital media.

I wonder how much of a turn-key system HP Video Merchant Services is. How easy would it be for this website to set up movie download service? Thousands of movie sites would be great for the movie studios and television networks. It wouldn’t be so good for Wal-Mart to have their competition only a click away.

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[Button via James Kolbern.]

TAM Money and Finance joined some great webloggers at Ashish’s Niti who hosted the Festival of Stocks. Here are some highlights:

• Larry Russell tells us average investors don’t do well actively investing. They should stick to index funds.
• With fossil fuel dependence making constant headlines attention should be paid to uranium. The Australian industry is the focus at Investor Trip.
• For the newbie technical traders (I’m not raising my hand) Trade 4 Cash guides you through an analysis of two stocks.