Top Stories of the Week

Inflation: Bad News, Good News

At first glace the number looks awful: U.S. consumer prices rose 0.7% in May, the fastest in nearly two years—and this in a week when rising rates already spooked the markets.

But the core inflation rate, excluding volatile food and energy, ticked up a mere 0.1%, within the Federal Reserve’s comfort zone. So the betting is still that the Fed will leave its benchmark rate at 5.25% when it convenes later in June.

Source: Wall Street Journal

Penn National Cashes in Its Chips

The racetrack and casino outfit accepted an $8.9 billion bid (including assumed debt) from Fortress Investment Group and Centerbridge Partners.

Source: Washington Post

Nymex Looking for Merger Partner

World’s biggest energy market talks to NYSE Euronext, Deutsche Boerse and Chicago Mercantile Exchange about a sale that could value the company at more than $11 billion. With derivatives trading skyrocketing world-wide, Nymex executives reckon the market needs greater heft and a global reach.

Source: Bloomberg

Blackstone Sends Investors a Warning

On the eve of its scheduled IPO, the private equity giant said that a proposal in Congress to tax private equity firms like corporations would lower the value of the partnership.

Source: Reuters

Bancrofts Eye Tough Terms for Dow Jones Sale

The family that controls the Wall Street Journal’s publisher is considering setting conditions for its sale that many managers—and their shareholders—would find too onerous to bear. Is this just a negotiating tactic?

Source: New York Times

U.S. Carmakers to Demand Givebacks

US automakers plan to seek big concessions in contract talks opening next month with the United Auto Workers in a bid to eliminate their yawning cost gap with foreign rivals The Big Three warn they will move jobs overseas if they don’t win significant relief. However, the automakers have talked tough before only to sign costly new accords with the UAW.

Source: New York Times

Wall Street’s Mortgage Bond Woes Spread

Bear Stearns, one of the biggest players in the market and a firm known for having tough risk controls, stumbled badly as the subprime mortgage market hit the wall.

Source: Wall Street Journal

Chipmakers Says Falling Prices Will Stunt Growth

Industry group slashes sales growth forecast for year to 1.8 percent from 10 percent.

Source: Financial Times

U.S. Retail Sales Surge in May

What, them worry? Consumers apparently forgot about the shaky housing market and rising gasoline prices in May as they hit the malls. Retail sales jumped 1.4%, twice as much as analysts had expected. Economists took the number as yet another indication that growth may be revving up again, and that helped push stocks higher on Wednesday.

Source: Financial Times

Parmalat’s Bankers Charged with Misleading Investors

Citigroup, Deutsche Bank, Morgan Stanley and UBS knew, or should have known, about the woes at the Italian milk products giant, Italian prosecutors said. The company collapsed in 2003 in Europe’s largest-ever corporate bankruptcy.

Source: New York Times

China’s Industrial Production Roared Ahead in May

Output grew a faster-than-expected 18.1 percent from year-ago levels, Beijing’s efforts to cool runaway growth still aren’t having much impact.

Source: Bloomberg

Philip Morris Loses in Supreme Court

The U.S. Supreme Court issued a number of rulings affecting business. In the most important, Watson v. Philip Morris, the court decided unanimously that the cigarette maker could not move an Arkansas class action from state to federal court, often seen as more favorable to corporate defendants. The High Court also ruled, in Long Island Care at Home v. Coke, that home-care workers, under federal law, are not entitled to overtime pay.

Source: Wall Street Journal