Friday morning headlines

Inflation worries: Higher gas prices may not have curbed retail sales last month, but they certainly had an impact on the inflation front. Consumer prices shot up at the fastest pace in 20 months, going back to when Hurricane Katrina shut down Gulf Coast oil production. Factoring out energy and food prices, however, inflation has been tame. That would lessen the prospects of an interest rate hike by the Federal Reserve - and keeping interest rates in check has become a big deal. The market is taking it all in stride - the Dow is up over 100 points after 45 minutes of trading. Bloomberg

Interest rate worries: Federal Reserve aside, they're still going up and you can't help but wonder when it's going to eventually slap the overall economy in the behind. Most of the immediate concern still centers on the subprime mortgage market, with the number of foreclosures way up. But higher rates also impact the company that wants to borrow money for an expansion or the couple who needs an auto loan. Rates have risen by about half a percentage point since the beginning of the year, which is a lot. From the NYT:

The recent rate move came as something of a surprise to Wall Street. It is the result, traders say, of heavy selling by foreign investors, who may be growing concerned about inflation, and holders of mortgage securities hoping to reduce the risks associated with higher rates. While the Federal Reserve Board sets the nation’s interest rate policy, buyers and sellers in the Treasury market drive the rates that affect both consumer and corporate borrowers. Bond yields rise when prices fall. The 10-year Treasury note stood at 5.22 percent at the end of trading yesterday, up from 4.7 percent a month ago.

Speaking of big money: Blackstone Group honcho Steve Schwarzman obviously enjoys acting like the big man (he's the guy who told the WSJ that he wants to "inflict pain" on and "kill off" his rivals), but suddenly he finds himself being pushed around by a couple of U.S. senators. Max Baucas, a Democrat, and Charles Grassley, a Republican, have introduced legislation that would tax partnerships like the Blackstone Group at the same rate as corporations. Even if it becomes law, the legislation wouldn't go into effect immediately. But it could threaten plans to take Blackstone public in an offering that would make Schwarzman even richer than he now is. From the NYT's Deal Book:

The extraordinary pay packages of those who manage hedge funds and private equity have caught the attention of the Senate Finance Committee, which is looking at whether the manager’s portion of a fund’s profits — called carried interest — should be taxed at the capital gains rate or the higher ordinary income rate. Private equity officials expressed concern last night that this bill could be a first step, with a higher tax on carried interest to follow. The proposal clearly rankled Mr. Schwarzman, who was speaking at an awards presentation during a Yale-sponsored conference at the New York Stock Exchange yesterday. During his acceptance speech for the “Legend in Leadership Award,” Mr. Schwarzman took a call on his cellphone. “There’s a crisis going on,” he told the audience.

Gas price holiday: Believe it or not, many individual stations are within striking distance of $2.99 a gallon, though the Auto Club's weekly survey shows the average price of self-serve regular unleaded gasoline in the Los Angeles-Long Beach area is $3.255. That's 7.8 cents cheaper than last week, 22 cents below last month, and 2 cents under last year. But don't get too excited - the government's top energy forecaster expects gasoline inventories to be tight throughout the summer, which will likely result in high prices. The main culprit continues to be refinery outages. Reuters

Office rents getting higher: Demand will outpace supply in L.A. County through 2010 and you know what that means. A UCLA survey says that annual increases should top last year's 4.7 percent rate (though the numbers will vary a lot depending on what part of the county you're in). Professional service companies such as law and accounting firms, engineering businesses, technical design firms and healthcare are expected to expand the most. LAT

Eisner bid looking good: Well, maybe. This is the topsy-turvy $385 million deal for Topps, the baseball card folks, in which the former Disney CEO is joining forces with private equity firm Madison Dearborn. Topps has turned down a $424 million offer from a rival baseball card company, Upper Deck, and Upper Deck has sued. In an SEC filing this morning, Topps said Upper Deck offered no indication of how it would finance the deal. There also are potential antitrust issues. Meanwhile, a judge ruled yesterday that Upper Deck should be allowed to make a fuller bid before shareholders vote on the Eisner offer. Reuters

NYT slumps: Here's another reminder that Tribune isn't the only newspaper company in trouble: The New York Times Co., which includes the NYT, Boston Globe and International Herald, posted a nearly 10 percent drop in ad revenue last month - despite a 21.4 percent jump in Internet ad revenue. Dow Jones also had a weak May (as did the LAT). NY Post

All about breasts: Yup, it's a Ben Silverman story. His first major move as head of NBC Entertainment is to purchase the rights to the popular - and controversial - Colombian telenovela "Sin tetas no hay paraiso" ("Without Breasts There is No Paradise"). He wants to develop it for primetime and have NBC-owned Telemundo produce a Spanish-language version. "Sin tetas" is about a young woman determined to get bigger breasts in order to escape poverty. She ends up working as a prostitute and gets involved with a drug dealer. Cool. Keep in mind that Silverman brought another popular telenovela to American audiences: "Ugly Betty." Variety

Beijing Olympics in primetime: Somehow NBC Sports head Dick Ebersol has convinced the International Olympic Committee to hold the final of the 400-meter individual medley just a little after 10 a.m. in Beijing. That's a crazy time for an Olympic swimming final, but it's perfect if you want to guarantee a large American viewership (7 p.m. in Los Angeles, 8 p.m. in Denver, 9 p.m. in Chicago and 10 p.m. in NY). It also means noon in Sydney. The rest of the world is up in arms, though you sort of get what you pay for: NBC shelled out $894 million for the U.S. rights to the Games; Australian TV paid $64 million. From the WSJ:

Time zones have been an issue ever since television and the global celebration of sport got together, but they are more urgent in the Internet Age, when sports results flash around the globe in real time. After a 2006 Winter Games in Turin that saw the once-bulletproof figure skating events lose head-to-head ratings battles with Fox's "American Idol," NBC had to go to greater lengths than ever to convince advertisers it has ways around time differences. The new schedule is the culmination of five years of lobbying by NBC Chairman of Sports and Olympics Dick Ebersol. It began shortly after Jacques Rogge became IOC president, when he stayed at Mr. Ebersol's Martha's Vineyard home. During their 30 hours together, Mr. Ebersol recalls, he told Mr. Rogge that he would ask for only one big favor: major live events in Beijing.