Doubting the Dow

The Dow Jones Industrial Average closed at its highest level in 13 months yesterday, but don’t get too excited. The Wall Street Journal calls the leap a “skeptics' rally” in which investors are feeling “uneasy.” The paper explains, “For these people, the market is taking on a ‘greater fool’ feel, meaning that many don't really believe in the investments they are making. They are banking on being able to sell to a ‘greater fool’ later.” In other words, some people are making “risky bets in order to keep up with the market,” but many of them aren’t optimistic about the investments they’re making.

The will of Jeffry Picower, the Madoff investor whose drowning death made news recently, reveals that his estate is worth billions. The New York Times says that may be “a spot of good news for Mr. Madoff’s victims.” Picower had been accused of knowingly engaging in the fraud by the trustee seeking assets for victims of the Ponzi scheme and was sued for all of the money he accumulated from Madoff accounts over many years. The paper says, “Mr. Picard has demanded the return of $7 billion he says Mr. Picower and his wife withdrew from their Madoff accounts over several decades. Lawyers for the Picowers say they withdrew $2.4 billion during the six-year recovery period allowed for the trustee’s claims under New York State law and contend that should be the limit of Mr. Picard’s claim.” Even if only the lowest estimate of cash is recovered from the estate, the amount will come close to doubling the $1.4 billion that the trustee has collected for victims of the scheme thus far.

In what the Wall Street Journal calls one of Google’s (GOOG) largest deals, the search giant has announced it will eat up mobile advertising company AdMob Inc. for $750 million in stock. The paper explains, “AdMob sells ads across thousands of Web sites that are tailored for cellphones and was one of the first companies to offer ads that run inside software for Apple (AAPL) Inc.'s iPhone and devices that run Google's Android operating system.” While Google has not had great success with mobile ads that it’s sold in the past, the capability and screen size of smartphones is creating greater potential in the space. As the paper puts it, “Consumer adoption of big-screen phones is whetting advertisers' appetites.”

In other Google news, the company has asked for more time to figure out the terms of its book settlement. According to the Wall Street Journal, “Google Inc., the Authors Guild and the Association of American Publishers have asked a judge for permission to delay filing a revised version of their agreement over books scanning and copyright until Nov. 13, according to people familiar with the request, as they finalize changes to address concerns that the agreement is anticompetitive.” The new settlement should answer critiques from the Justice Department and others who have said that the original deal that Google struck with authors was too sweeping.

The Washington Post says that there could be another taxpayer bailout coming our way soon. The paper reports that the Federal Housing Administration is running low on money, and unless things turn around for the government agency, it could require what the paper calls “an automatic taxpayer bailout.” The paper explains, “The agency, which collects premiums from borrowers who take out FHA-insured mortgages, has been automatically drawing down on money it deposited with the Treasury Department when the FHA was flush with cash. Those funds have dwindled as the FHA's losses grew. If the losses continue unabated, the FHA would still receive money from Treasury.”

And finally, the back-and-forth between the British confectionary company Cadbury (CBY) and U.S. food conglomerate Kraft (KFT) drags on, the Financial Times reports. Yesterday, Cadbury “defiantly rejected” Kraft’s takeover bid, calling the offer “worse than the proposal the board has previously rejected." Kraft has said that it’s not shutting the door just yet and could consider higher offers. Business Week says that Kraft is being persistent not only because brand-name candy has proven that it can be recession-resistant, but also because of its growth potential. The article explains, “Kraft macaroni-and-cheese may be an American favorite, but it won't necessarily catch on in China or India. Sweets are different.”