The story posted by The Financial Times yesterday saying The Sun would be a top candidate to be sold after Tribune Co. is taken private has now been completely rewritten - to say that it's really The Orlando Sentinel - NOT The Sun - that would be on the block. How something like this happened, we have no idea. But here's the new version, for the record:

The Orlando Sentinel, a Florida-based newspaper and asset of the Tribune Co, is an attractive and potentially likely divestiture after Tribune’s take-private deal closes, sources familiar with the company told mergermarket. The first of the sources, who is a former advisor to Tribune and who continues to hold shares in it, as well as an industry analyst, speculated the newspaper may sell for more than USD 100m.

Tribune plans to close its take-private deal, under which Tribune employees have ownership but Sam Zell has control, by year’s end. The deal must close by 15 May 2008 or the company will risk termination of the deal, according to regulatory filings.

Posted by Bernie Kohn at 10:56 AM | Permalink | Comments (0)
                    

From the Financial Times. Nobody quoted on the record. Ted Venetoulis, who fronts a local group that says it wants to buy the Sun, told my colleague Andrea Walker this afternoon that he hasn't talked to Tribune recently and has no indication they want to sell.

The Sun newspaper is among assets that Tribune could sell if cash is needed after its take-private deal closes, three sources familiar with the company told mergermarket. This news comes as Federal Communications Commission chairman Kevin Martin has proposed exempting Tribune from rules prohibiting the ownership of newspaper and television stations in the same market for the next two years.

Two of the sources stressed that this could be the case only if Illinois-based Tribune feels pressure from the approximately USD 13bn in debt which it will have as a result of its planned USD 8.2bn take-private deal. One of the sources said a sale of The Sun, a daily newspaper in the Baltimore, Maryland area, is “highly likely” in the year following the closing of the deal, under which Tribune employees have ownership but Sam Zell has control.

Among Tribune’s holdings, The Sun is likely the largest paper the Tribune Company would look to sell, the sources said, as other metropolitan dailies such as New York-based Newsday, the Chicago Tribune and the Los Angeles Times are likely to continue to be held by the company.

The Sun has seen declining revenues and faces competition stemming from last year’s arrival of the Baltimore Examiner, a free daily newspaper in its market, the sources said. Tribune has started its own free dailies in Chicago and elsewhere, but not in Baltimore, where The Examiner circulates more copies than the Sun. One source speculated the paper could be sold to an individual or group looking “to reach into [Washington] DC,” and named area billionaire Daniel Snyder as someone who could seek to buy it.

Baltimore Media Group, headed by Theodore Venetoulis, has previously expressed interest in purchasing the Sun. Earlier this year, an analyst said The Sun could garner a purchase price of up to USD 517m. A second analyst now estimates The Sun’s worth to range from USD 100m to USD 300m.

One of the sources familiar with the situation said a purchase price would likely be between the highest of the second analyst’s estimate and the top of the Lehman Brothers estimate. The second analyst said it may be tough for a buyer purchasing The Sun to break into the Washington Post’s market, which has been dominated by the latter paper for decades. However, the analyst noted, the two newspapers “battle… in a handful of Maryland counties immediately north of DC.

“I wouldn’t be surprised if they [Tribune] sold it,” the analyst said of the possible divestitures of The Sun. For buyers, the analyst said, The Sun and Baltimore are attractive because the city has recently seen an increase of development and a growing affluent community. For the Tribune, selling such a large asset would be beneficial because it would not cut from the company’s three flagship papers, the analyst said. The sale of The Sun would generate a large amount of funds with which to pay down debt. The analyst said that because the paper is not one of Tribune’s three largest, it could be considered “non-core” by the organization.

The first two of the sources familiar with the situation said that The Sun would be sold before newspapers in New York, Chicago, or Los Angeles, which they said are key markets for the NYSE-listed Tribune. Last month, Tribune sold other newspapers outside those three areas - two southern-Connecticut based newspapers.

Tribune plans to close its take-private deal by year’s end. The deal must close by 15 May 2008 or the company will risk termination of the deal, according to regulatory filings.

Posted by Jay Hancock at 6:48 PM | Permalink | Comments (0)
                    

This is decent news for the Maryland economy. State new car sales, which plunged 14 percent in September (compared with sales in September 2006), did much better in October -- falling by less than 1 percent compared with sales 12 months previously. It was the best year-over-year performance since October 2006, when new car sales rose a bit over those of October 2005. Used car sales also fell slightly in October. (We compare year-over-year figures to clean out seasonal variations. Car sales normally fall when the weather gets colder.)

So far this year Maryland new car sales have fallen 5 percent. October car sales are not yet posted on the Motor Vehicle Administration's Web site, says spokesman Jack Cahalan, because of a computer upgrade. But here are the numbers:

New cars sold: 32,965
Value: $885.7 million

Used cars sold: 59,348
Value: $516.2 million

Thanks to reader John for prompting the MVA to release the numbers (they're two weeks late) and forwarding them to me. Here is a recent column on Maryland car sales and what they might be trying to tell us.

Posted by Jay Hancock at 9:24 AM | Permalink | Comments (0)
                    

Dickie Scruggs, Trent Lott's brother-in-law and a Mississippi trial lawyer known for reaping millions from lawsuits against tobacco and insurance companies, was indicted on charges of trying to bribe a judge, various news outlets are reporting. Here is the indictment. From WLBT TV in Jackson:

Dickie Scruggs and Four Others Indicted

A federal grand jury has indicted prominent attorney Richard "Dickie" Scruggs and several other attorneys on criminal charges of trying to bribe a state court judge in a civil case.

The indictment also charges two other attorneys in Scruggs' law firm, his son Zack Scruggs and Sidney Backstrom, with conspiracy. It says they conspired with another lawyer, Timothy Balducci and former state auditor Steve Patterson to bribe Circuit Judge Henry Lackey with $40,000 to enter an order in a lawsuit favorable to the Scruggs' law firm.

In that suit, Jones versus Scruggs, the lawyers were fighting over how to split more than $26 million dollars in attorney's fees.

The suit claimed that Scruggs was withholding fees in a Katrina insurance litigation. That suit was assigned to Judge Lackey in the 3rd Circuit District which encompasses Oxford and Lafayette county.

Judge Lackey was cooperating with the FBI's Public Integrity Section in a scheme that began in March and ended a few weeks ago when the Judge received the payoff.

Both Scruggs and their lawyer were in Federal Court in Oxford this afternoon.

Just yesterday, the FBI seized a computer hard drive from the Scruggs lawfirm in Oxford.

Dickie Scruggs' brother-in-law is Senator Trent Lott who just announced on Monday, his plans to retire from the U-S Senate.

Posted by Jay Hancock at 9:59 PM | Permalink | Comments (0)
                    

This Bloomberg story is a little breathless, but there can be no doubt now that the credit crunch has spread to commercial property. Will be interesting to see how this affects Baltimore.

The cost of derivatives protecting investors from defaults on the highest-rated bonds backed by properties more than doubled in the past month, according to Markit Group Ltd. Prices suggest traders anticipate defaults rising to the highest level since the Great Depression, according to analysts at RBS Greenwich Capital in Greenwich, Connecticut.

The seven-year rally in offices and retail properties ended in September when prices fell an average of 1.2 percent, according to Moody's Investors Service. More losses are likely because banks are holding $54 billion of commercial mortgages they can't sell, data compiled by New York-based Citigroup Inc. show.

Lenders are struggling to sell loans to investors after losses on debt backed by subprime mortgages to people with poor credit caused financial markets to seize up in July and August. Bonds with AAA ratings secured by properties ranging from the Sears Tower in Chicago to trailer parks in Delaware yield about 203 basis points more than similar maturity Treasuries, up from 92 basis points on Oct. 12, according to Morgan Stanley indexes.

Posted by Jay Hancock at 12:05 PM | Permalink | Comments (0)
                    

Late yesterday the Western banking company -- sometimes touted as the natural future buyer of PNC Financial, which took over Mercantile -- disclosed big mortgage problems. Interesting that these are home equity loans -- second mortgages -- so presumably they weren't issued to investors who bought a property and simply walked away. From the AP:

After avoiding major trouble most of the year, Wells Fargo & Co. has finally bogged down in the mortgage muck that's muddying one major bank after another.

Wells Fargo, the fifth-largest U.S. bank, waded into the mess by saying it will recognize $1.4 billion in losses in the fourth quarter on home equity loans that aren't being repaid as the real estate slump deepens in California, the Midwest and other major markets.

Until Wells Fargo's disclosure late Tuesday, the San Francisco-based bank had been largely unscathed by the turmoil that has battered a long list of other major lenders.

"Clearly, this is a disappointment because (Wells) had been seen as better managers of credit than many other big banks," said RBC Capital Markets analyst Joseph Morford. "But now they have a big blemish on them, too."

Posted by Jay Hancock at 8:27 AM | Permalink | Comments (0)
                    

I'll be on WYPR today at 1 p.m. talking with Marc Steiner and Bob Kaufman about "How a socialist and a capitalist both concluded that the United States needs to end the war on drugs." Kaufman's the socialist, in case you weren't sure! We'll be talking about this column: "Let Adam Smith Be the Drug Pusher."

Posted by Jay Hancock at 10:29 AM | Permalink | Comments (0)
                    

23rd ANNUAL PNC CHRISTMAS PRICE INDEX UP 3.1 PERCENT; RISING WAGES FOR MILKMAIDS, HIGHER COMMODITY PRICES LEAD INCREASES -

Cost of “Twelve Days of Christmas” Song Items Reflect Consumer Pricing Trends -

PITTSBURGH, Nov. 26, 2007 – The significantly higher price of gold and increased compensation for minimum wage workers will make Christmas more expensive this year, according to the PNC Christmas Price Index. The tongue-in-cheek economic analysis by PNC Wealth Management is based on the cost of gifts in the holiday classic, “The Twelve Days of Christmas.”

According to the 23rd annual survey, the cost of “The Twelve Days of Christmas” is $19,507 in 2007, a 3.1 percent increase over last year. The rise in gift prices mirrored the U.S. government’s Consumer Price Index – a widely used measure of inflation calculated by the Bureau of Labor Statistics. The Consumer Price Index is up 3.5 percent so far this year.

“Each year, the Christmas Price Index reflects trends in the broader economy,” said James Dunigan, managing executive of investments for PNC Wealth Management. “This year, increased commodities prices, concerns about the value of the dollar and the first minimum wage increase in 10 years were major factors in the increases to the Christmas Price Index.”

Posted by Jay Hancock at 9:54 AM | Permalink | Comments (0)
                    

While we were gone for Thanksgiving, the college kid got five credit-card offers. All of them blew blue smoke abouut how exclusive they are and how not just anybody can qualify. American Express Gold Card: "The road to financial success has many milestones marking how far you've come. You've just reached one such milestone. You're selected for the American Express Preferred Rewards Gold Card." Platinum MasterCard: "Carry PLATINUM. Command RESPECT." Etc.

All this for a kid who will earn less than $5,000 this year. The road to financial succes DOES have many milestones. One of them is the very first time you tell the Platinum MasterCard people to jump in a lake.

Posted by Jay Hancock at 10:32 AM | Permalink | Comments (0)
                    

Blogging will resume Monday.

Posted by Jay Hancock at 2:49 PM | Permalink | Comments (0)
                    

Pre-winter energy update: The cost of heating oil is way up along with the cost of crude and gasoline. The cost of natural gas is comparatively lower. And the wholesale cost of electricity is down, too, but it won't do you any good. BGE has locked into (higher) winter prices already, and unlike last year nobody is offering to undercut BGE's standard price and pass along the favorable wholesale prices. This year, those who heat their homes with natural gas are likely to be better off than people depending on oil furnaces or electric heat.

Check out Floyd Norris's piece in the New York Times recently, in which he writes: "A result is that those who heat their homes with natural gas -- by far the dominant fuel in the United States -- will see prices roughly in line with last winter's. But for those who use heating oil, as many do in the Northeast, prices seem likely to be about 50 percent higher than they were last winter."

The reason for cheaper natural gas now is the same as in times (see two years ago) when natural gas is more expensive: the stuff is hard to move around, and most users can't toggle between gas and oil depending in which is cheaper. Even though natural gas prices are higher overseas, exporting U.S. supplies by liquefying them and pumping them into tankers is very expensive, wiping out any potential profit. And even though U.S. gas prices are more affordable than oil these days, few people will buy gas furnaces for that reason alone. Thus U.S. gas supplies will remain relatively plentiful and relatively affordable. BGE's natural gas price (not counting delivery) for November is 92 cents per therm: 28 percent higher than last year's November price but 44 percent lower than 2005's November price.

Wholesale electricity prices on the Mid-Atlantic grid are down sharply. Juice for December delivery is down 33 percent from its price over the summer. But no company I'm aware of is aggressively taking these lower prices and offering to pass them onto BGE customers. I assume this is because competitive retailers are waiting to see what the Maryland legislature does in next year's session. They want the General Assembly to make it easier for rivals to reach BGE customers, and they're also afraid legislators may re-regulate the electricity market. So they don't want to invest a lot of money in marketing campaigns until they know what the landscape looks like.

Heating oil, meanwhile, has soared -- up 70 percent since late 2006 and and 25 percent since August. Hope you filled the tank early this year.

Posted by Jay Hancock at 10:30 AM | Permalink | Comments (1)
                    

From Bloomberg News this morning. Bloomberg also pronounces ethanol "2007's worst energy investment."

By Mario Parker Bloomberg News

CHICAGO: Cascade Investment, a company owned by Bill Gates, chairman of Microsoft, is preparing to sell its shares in Pacific Ethanol, which has lost almost two-thirds of its market value this year.

Cascade, which owns a 21 percent stake in the company, will convert its preferred stock to 10.5 million common shares and offer them to the public, according to a Pacific Ethanol filing with the U.S. Securities and Exchange Commission. At the closing price Friday, Gates has lost $24 million on the investment. He paid $84 million for his stake in 2005.

Pacific Ethanol, based in Sacramento, California, has fallen 63 percent this year in Nasdaq composite trading, as the burgeoning supply of the fuel additive drove prices down 25 percent. The company reported a third-quarter loss last week of $4.8 million.

The filing is "nothing other than optionality," Neil Koehler, chief executive of Pacific Ethanol, said Friday in an interview by telephone.
Cascade asked Pacific Ethanol to make the SEC filing, Koehler said.

Cascade may sell the shares from "time to time," Pacific Ethanol said in the filing. Gates bought the preferred shares two years ago to help the company finance construction projects on the West Coast.

A voice-mail message left for Michael Larson, who manages Cascade's investment holdings, was not returned.

Pacific Ethanol shares fell 13 cents, or 2.2 percent, to finish Friday at $5.70, their lowest level since January 2005.

Pacific Ethanol produces about 80 million gallons, or 190 million liters, of the additive annually at its plants in Madera, California, and Boardman, Oregon. The company owns a 42 percent stake in a 48 million-gallon plant in Windsor, Colorado.

Posted by Jay Hancock at 10:28 AM | Permalink | Comments (0)
                    

A couple weeks ago the Mystery Economic Image of the Day was this:

What is it? I quote from the Maryland Port Administration Press release:

'The Maryland Port Administration announced today that the Helen Delich Bentley Port of Baltimore will begin receiving the first shipment of a series of wind turbine parts on Dec. 12 [2006] at the North Locust Point Terminal. The eventual number of turbines to be imported from various locations around the world over the next five to six months will be 32...

'The elements for these giant wind-power turbines once completed at their final destination, in Pennsylvania, will weigh 290 tons each, will span a diameter of 300 feet from blade tip to blade tip and reach a height of 250 feet.

' "The extreme dimensions of this cargo require planning equal in size. Our logistics team has worked hard in preparation of our first vessel to Baltimore and we look forward to a safe and efficient discharge," said Kris Helling, logistics manager for Suzlon Wind Energy Corp.' 

Posted by Jay Hancock at 3:17 PM | Permalink | Comments (0)
                    

Hedge fund manager/blogger Barry Ritholtz has a bone to pick with the New York Times for its "Inflation Was Tame in October" headline regarding yesterday's consumer price index report. For the record, The Sun's headline was: "Consumer prices rise 0.3% in Oct./1.4% increase in cost of gasoline helps fuel inflation, makes Fed rate cut less likely"

Won't someone please fire these lazy headline writers?

Its amazing to read these headers on inflation, which are then belied by the underlying data. As the BLS table above should make clear to even the most starry-eyed fan of Alan Greenspan, even the official inflation data remains elevated.

The NYT's headline AND reporting was the worst of the entire crowd: Inflation Was Tame in October

Inflation remains contained despite high oil prices and a record low dollar, a government report showed yesterday, offering some reassurance to the Federal Reserve as it considers whether to lower interest rates again at its meeting next month.

But economists warned that sharp increases in food and energy costs will weigh on consumers in the coming months, putting a damper on spending in other parts of the economy.

Compare that headline with these:

CPI Rise Yet Another Headwind For Retailers Forbes
Pace of consumer inflation quickens Chicago Tribune
US Economy: Energy-Led Price Gains May Restrain Fed Bloomberg
Rising gas prices push up inflation AP
US inflation fears knock stocks BBC News

Partial credit goes to the Journal headline writer trying to convey the most info in their title:

Consumer Prices Grow Moderately As Low Housing Costs Offset Energy Wall Street Journal

Let's look at the actual data:

Headline CPI grew 0.3% over the past month, the same as September. The core index (excluding food and energy), rose 0.2% for the fifth straight month. Annualized, that's 3.7% and 2.2% (ignore the rounding).

At 2.2% gains year over year, Core inflation is above the Fed's target rate.

Starbucks (SBUX) was the latest company to feel the pinch of inflation: Rising wholesale prices forced the world’s largest chain of coffee shops to raise drink prices. This led to the first ever decline in visits, and a lowered profit and sales forecast.

Starbucks, up until recently, very much a stock darling, has seen their share price tumble by a third this year.

As we have repeatedly stated, there is no free lunch. When cyou drop rates as low as we have, you ignite price increases.

Expect to see more problems like these. Firms that have been absorbing their input cost increases can no longer do so. When they finally pass along these price increases, pinched customers have no choice but to cut back.

>

Posted by Jay Hancock at 10:59 AM | Permalink | Comments (0)
                    

Study by Georgia State's Erdal Tekin and Roy Wada and available through the National Bureau of Economic Research.

This paper examines the effect of body composition on wages. We develop measures of body composition – body fat (BF) and fat-free mass (FFM) – using data on bioelectrical impedance analysis (BIA) that are available in the National Health and Nutrition Examination Survey III and estimate wage models for respondents in the National Longitudinal Survey of Youth 1979. Our results indicate that increased body fat is unambiguously associated with decreased wages for both males and females. This result is in contrast to the mixed and sometimes inconsistent results from the previous research using body mass index (BMI). We also find new evidence indicating that a higher level of fat-free body mass is consistently associated with increased hourly wages. We present further evidence that these results are not the artifacts of unobserved heterogeneity. Our findings are robust to numerous specification checks and to a large number of alternative BIA prediction equations from which the body composition measures are derived.

Our work addresses an important limitation of the current literature on the economics of obesity. Previous research relied on body weight or BMI for measuring obesity despite the growing agreement in the medical literature that they represent misleading measures of obesity because of their inability to distinguish between body fat and fat-free body mass. Body composition measures used in this paper represent significant improvements over the previously used measures because they allow for the effects of fat and fat free components of body composition to be separately identified. Our work also contributes to the growing literature on the role of non-cognitive characteristics on wage determination.

Posted by Jay Hancock at 10:31 AM | Permalink | Comments (0)
                    

I am reading French President Nicolas Sarkozy's political memoir and policy prescription, Testimony. From his preface to the U.S. edition:

I respect the fact that in the United States it is possible for those who try hard and deserve it to get a second chance. In France and most European countries, you usually need the right diplomas to succeed in life. It also helps, if possible, to belong to the right families. Moreover, anyone who fails once -- by going bankrupt, for example -- hardly ever gets a second chance. By contrast, in the United States there are all sorts of opportunities for those who know how to seize them. Americans don't ask about the diplomas or the social origins of someone who comes up with a new idea; they just ask whether the idea's good or not. Past failures, if they're honorable ones, should be seen as an opportunity to learn, and not as a stain on one's reputation.

It's thanks to these values that American society makes possible the most impressive social advancement of any country in the world. Scientific research in the United States attracts the best researchers from around the world, who quickly become American patriots. Indeed, half the Americans who have won Nobel prizes have been immigrants. It is doubtless only in the United States that so many entrepreneurs without college degrees are among the richest citizens.

Posted by Jay Hancock at 11:40 AM | Permalink | Comments (1)
                    

This is quite unusual. During the last real estate collapse, in the early 1990s, I remember a few firms shoring up their money-market funds so they wouldn't "break the buck." Now we're seeing it again. Money-market mutual funds are supposed to invest in short-term, high-grade paper so that they don't lose any investors' principal. Their share price is supposed to never go below $1 -- unlike shares of other mutual funds, which fluctuate based on the underlying value of the investments. Legg seems to have bought some poorly performing paper and is now injecting $100 million of its own money so the share price doesn't go below $1. The fund in question is an institutional fund, Bloomberg reports, not a fund involving retail investors. The Legg filing doesn't say anything about mortgages, but Bloomberg reports that the fund in question bought structured investment vehicles, many of which have gotten in trouble by owning mortgage-backed securities. From the Legg filing:

As discussed above in Note 10 of Notes to Consolidated Financial Statements, in November 2007 we entered into arrangements with a large bank to provide letters of credit (“LOCs”) for an aggregate amount of approximately $238 million for the benefit of two liquidity funds managed by one of our subsidiaries. As part of the LOC arrangements, we agreed to reimburse to the bank any amounts that may be drawn on the LOCs and, to support this agreement, we provided approximately $178 million in cash collateral, which will be increased to the full amount of the LOCs by December 28, 2007. In addition, in October 2007 we invested $100 million in another liquidity fund that a subsidiary manages in order to provide additional liquidity support to the fund. We may elect to provide additional credit or other support to liquidity funds managed by our subsidiaries if we deem this action necessary and appropriate in the future. If we do so, we may be required to use additional cash to pay for the support or as collateral. The pledge of cash and the investment in the fund restrict our ability to use the cash for other purposes and, together with any future uses of cash to provide additional support, reduce our flexibility to use these assets for other corporate purposes, including debt prepayments, stock repurchases and acquisitions.

Posted by Jay Hancock at 10:46 AM | Permalink | Comments (0)
                    

Economics/life-navigation advice of the day:
Parents: Do not turn your children into actors/models/beauty-pageant contestants. Send them to college. Teach them who Benazir Bhutto is and how to solve polynomial equations. That is all.

Children's Modeling & Acting Ages 0-18 Start your child today, the legitimate way! No Fees, No Dues Ever! Easy as 1, 2, 3!

Make copies of your child's photo. On back put name, birth date & contact number.
Include short note telling them what you are seeking (modeling, commercials, etc)
Mail to the Children's Agents using our Preprinted Mailing Labels or Lists.

You will never be asked for money from anyone on our lists. We supply you the names and addresses of licensed agents nationwide.
Children's Photo's
Professional photos of babies are NOT required by the agencies on our list, rather the opposite. A few simple snapshots of your baby will do. Some parents may insist on having professional photos taken. Please do not do this strictly for modeling purposes. You will simply be wasting your money. At this stage of a baby's life, his/her looks change incredibly fast. Also know the agents on our lists will not force you to use their photographer. If you ask for a list, they will supply you with it.

Featured Items...

Parents:
for maximum exposure
also use these lists:

Personal Managers
Casting Directors
Producer/Production Co

Posted by Jay Hancock at 10:09 AM | Permalink | Comments (0)
                    

The ethanol lobby has gone ballistic over comments made two weeks ago by Jean Ziegler, the United Nations' independent expert on the right to food for the world's poor. From an AP story on Ziegler's comments two weeks ago:

Jean Ziegler, who has been the United Nations' independent expert on the right to food since the position was established in 2000, called Friday for a five-year moratorium on biofuel production to stop what he called a growing "catastrophe" for the poor. Scientific research is progressing very quickly, he said, "and in five