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Herb's Hotline Part 2: Banking on Options?

That sound you heard yesterday in the absence of The Hotline was not the boredom my new commentary cohort Bill (the quotemeister) Meehan of Cantor Fitzgerald mentioned today . It was the drain of adrenaline following the latest wave of last quarter's earnings report. Now we're back to the ol' "will the Fed, or won't the Fed the next time it meets?" (I say won't.) That should fill the gap for the better part of the next six weeks or so, until the next wave of earnings reports, followed by the next Fed meeting on July 22. All of that, of course, will be interspersed by the usual round of earnings warnings... But, gee, who am I to spoil today's party? ...

Speaking of spoiling parties: Which banks in the San Francisco area have been making loans based on the value of people's stock options? (I dunno, and if I did, I wouldn't have posed it as a question?) Some apparently had been, which could make this quarter's earnings nothing to write home about. (But surely something to write about!)

Switching gears: How 'bout those weekly retail sales today? Most were up, with the very notable exception of Gymboree (GYMB). May comp-store sales down 33% from last year?! Great concept. Lousy execution. The story of that company's life... And remember the recent piece here on Medallion Financial (TAXI - Get Report), which finances taxi-cab medallions? (You don't? Then go read it!) The item mentioned a quirky way the company was accounting for some of the loans to cabbies. Enter ING Barings, which responds in a report headlined, "Accounting for Appreciating Loan Value Not a Big Deal." Well, it may not be a "big" deal, but it is enough of a deal that even the ING analyst confessed in the report: "Our initial reaction to the structure [of the equity participation loan] was akin to detecting sour milk." Now that's a real vote of confidence! ...

This just in from Raymond, a veteran 69-year-old stockbroker from San Francisco who checks in from time to time with excellent tidbits (remember his knock on Cisco (CSCO - Get Report) when it was much higher?): Qualcomm (QCOM - Get Report) will never sell its CDMA technology to China, because China needs to be able to intercept phone calls, so it will never go for something as secure as Qualcomm's technology. (Makes as much sense as anything else I've heard!)

Finally, this morning's piece on Harley-Davidson (HDI) sparked a couple of beefs from several money manager/bikers who happen to also be Harley owners. The most notable was not from Brenda (seriously, she is a biker) Buttner, but from's very own Ben (IPO) Holmes, who writes:

"When was the last time you saw a Lexus or Range Rover owner tattoo those corporate logos into their skin? I'll bet never.

'Ooooo, nice tat. What is it?'

" 'The Saturn logo. It symbolizes my love for dent-resistant doors.'


"How many U.S. vehicle manufacturers presell every unit they build before they build it? Only one. Harley-Davidson is the ultimate 'just-in-time' manufacturer. People wait for years -- years -- to take delivery on new Harleys (could Dell (DELL) get away with that?) Resale prices of used HDs are often higher than sticker on new bikes.

"HDI is an icon, an American legend, an impeccable example of hyperbrand marketing. Have you ever talked to a franchise owner? They are printing money. The money, however, is not in bikes, it's in chrome bits and pieces, clothing and coffee mugs -- all produced by 'The Motor Company'.

"HDI is Disneyland without the rides, Coke without the calories. Harley-Davidson is antitech. It's farm equipment. Paint a Harley green and bolt on yellow wheels and you have a John Deere (who doesn't love John Deere?)

"Harley-Davidson is America and the whole world wants to be America.

"That said, the big question that remains unanswered is this: When rope day comes for the New Economy, and the U.S. citizenry reins in its spending, what is the first thing that they will stop buying?

"Anachronistic toys."

But even then they'll be awaiting the next edition of ... The Hotline!
Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at . Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.

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