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MAY 1, 2006
Edited by Harry Maurer Pricier Black Gold You know oil prices are lofty when even OPEC starts to worry. Crude oil hit a record $72.17 a barrel on the New York Merc on Apr. 19 after the Energy Dept. reported drops in U.S. stockpiles of oil and gasoline and the standoff over Iran's nuclear ambitions intensified. OPEC members fear astronomical prices will sap growth, boost inflation, and trigger a backlash, but they're pumping almost all they can. "It is obvious that OPEC does not have a magic wand," said Qatar's Oil Minister, Abdullah al-Attiyah, on Apr. 18. What's the outlook for summer? The futures market is sending mixed signals. Oil for August delivery was pegged at more than $75 on Apr. 19. But August wholesale gasoline is a dime cheaper than now. So prices at the pump -- which averaged $2.78 on Apr. 17 -- may stay below $3 during vacation season. See "Spring Fever at the Pump" 
Mr. Hu Goes To Washington When is a state visit not a state visit? When the caller is from In a possible bow to protectionist sentiment, President George W. Bush declines to call his first Washington summit with Chinese President Hu Jintao a state visit and won't host an official banquet. But both leaders hope the meeting, set for Apr. 20, will help allay friction over the bloated U.S. trade deficit and such issues as Taiwan, Iran's nuclear ambitions, China's undervalued currency, its appetite for oil, and intellectual property piracy. On Apr. 18, Hu kicked off his U.S. tour by dining with the West Coast potentate, Microsoft (MSFT )'s Bill Gates. See "Watchful and Wary: China's Hu Visits Bush"   The Great Rate Mystery Investors are playing a game of red light-green light when it comes to divining whether the Fed will keep hiking rates. On Apr. 18 the Dow rocketed 195 points after the release of minutes from the March meeting suggesting that Ben Bernanke and his band would end the tightening cycle in May. But the next day's inflation report erased some of those hopes: Consumer prices in March rose at 0.4%, the highest rate in more than four years. The Shakeup Begins New White House Chief of Staff Josh Bolten isn't wasting any time getting a promised reorganization rolling. Bolten's successor at the Office of Management & Budget is Rob Portman, a former Ohio congressman who for the past year served as the U.S. Trade Representative. The low-key Portman, who worked closely with Democrats while he was in the House, should win easy Senate approval. He'll be replaced by his deputy, veteran trade negotiator Susan Schwab. Meanwhile, Karl Rove will move from policy to focusing on the midterm election. And the Bushies will need someone to explain it all after the Apr. 19 resignation of top White House spokesman Scott McClellan. Did Bausch & Lomb Blunder? Maybe Bausch & Lomb (BOL ) Chairman Ron Zarrella needs a course in crisis management. Many B-school profs say Zarrella didn't move fast enough after reports surfaced suggesting that ReNu with MoistureLoc Solution for contact lenses could be linked to a fungal eye infection that can cause blindness. On Apr. 13, a few days after word got out, Bausch & Lomb placed full-page ads in newspapers and asked retailers to take the product off their shelves while it studied the problem. See "Bausch & Lomb: Crisis Management 101" Bear Stearns May Get A Partner James Cayne, CEO of Bear Stearns (BSC ), keeps a Chinese-made motorcycle in his Madison Avenue office. Now he could land some Chinese capital to go with it. On Apr. 17, Bear Stearns stock shot up 3% on a Wall Street Journal report that state-owned China Construction Bank may spend up to $4 billion to buy convertible bonds that could be flipped over to an eventual 20% stake. China Construction denied the story. Bear Stearns declined comment, but a hookup with a Chinese major would speed its entry into that market. See "Untangling the Bear Sterns China Buy-In" Apr鑣 Moi, No Options After racking up $1.6 billion in stock options by the end of last year, UnitedHealth Group (UNH )chief William McGuire wants his board to pull the plug on new grants for senior staff. On Apr. 18, McGuire asked for the ban "for the foreseeable future" after catching heat from shareholders for alleged back-dating of options to annual low points. Although he's not yet taking sides, Minnesota Attorney General Mike Hatch plans to intervene in a lawsuit attacking options practices at the company. Toyota's Southern Strategy This carmaker clearly senses blood in the water. With GM (GM ) and Ford (F ) shutting plants right and left, Toyota (TM ) is scouring Southern states for yet another factory, says Michael Robinet, vice-president of CSM Worldwide, an auto research firm in Northville, Mich. The move is especially bold considering that Toyota just opened a pickup truck plant in San Antonio and announced plans to build its RAV4 compact SUV in a new factory in Ontario by 2008. Toyota sales jumped 10% in the U.S. last year, to 2.3 million vehicles, just behind Chrysler (DCX ) for No.3 in the States. Taxman To Symantec: Pay Up Just as Americans were ending their annual tax nightmare, a new one was beginning for Symantec (SYMC ), the top seller of information security software. The company disclosed in an SEC filing on Apr. 17 that the IRS thinks it owes a thumping $1 billion in back taxes, inherited when it acquired storage software outfit Veritas last year. The company balked and is filing a petition. Symantec has been snake-bit lately, its stock having slipped 50% since news of the Veritas deal leaked in late 2004. Pressuring The Gray Lady Following similar staredowns at Knight Ridder (KRI ) and Time Warner (TWX ), a large investor is trying to shake up another blue-chip media company. Morgan Stanley Investment Management withheld votes for New York Times Co. (NYT ) directors at its Apr. 18 annual meeting. At issue, aside from standard grievances (the stock's a laggard even by peer group standards), is a two-tiered setup in which family-controlled Class B shares elect 9 of 13 directors. MSIM owns 5.8% of the common stock. It won't be easy to change the Times' ways, but investors holding an additional 22% also voted with their feet. Image Makeover Of The Week Is nothing sacred? Wal-Mart (WMT ) is starting to frown on Smiley, the happy, high-energy character that has symbolized the gargantuan retailer's rock-bottom price strategy for more than a decade. Smiley is vanishing from TV ads that will instead feature actors and celebrities and a lower-key approach, The Wall Street Journal reported on Apr. 18. While Smiley will still adorn print ads and store signs, his reduced role is part of Wal-Mart's shift away from the "everyday low prices" theme in order to lure higher-income customers more interested in value. There's another reason to downplay Smiley: He is a favorite device for critics looking to badmouth the company. Perhaps in response to such attacks, Wal-Mart on Apr. 17 announced the latest foray in its recent charm offensive, tweaking its health plan. Part-timers will now become eligible for insurance after a year of employment, instead of two, and will be able to sign their kids up, too. That should give them something to smile about. See "Wal-Mart Puts on a Happy Face"
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