The Big Picture

Estimated Relative Standard Errors in Housing Data

Posted by Barry Ritholtz on Saturday, May 17, 2008 | 11:00 AM

in Data Analysis | Mathematics | Real Estate

Regarding yesterday's New Home Starts, an emailer writes:

You used to discuss the Commerce Dept.'s standard statistical error regularly. In light of that surprising Housing Start number, could you please update that?

Sure thing. I love this sort of data sifting exercise. (I used to do this all the time, but I could actually hear readers falling asleep through my screen).

Let's go to the Census Department release.

HOUSING STARTS
Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,032,000. This is 8.2 percent (±14.5%)* above the revised March estimate of 954,000, but is 30.6 percent (±6.7%) below the revised April 2007 rate of 1,487,000.

As is so often the case, the devil is in the details:

As far as the April Hosuing Starts go, a monthly change (seasonally adjusted annual rate) was 8.2%, versus an estimated relative standard error of ±14.5%. Hence, the monthly change is not statistically significant; that is, it is uncertain whether there was an increase or decrease in Housing Starts from March to April.

As to the 30.6% year over year drop -- that is ±6.7% -- and therefore is statistically significant.

~~~

And I thought I was the only one who cared about such mathematical trivialities . . .

Sources:
NEW RESIDENTIAL CONSTRUCTION IN APRIL 2008
Manufacturing and Construction Division
U.S. Census Bureau, MAY 16, 2008 AT 8:30 A.M. EDT
http://www.census.gov/const/newresconst.pdf

Confessions of a Short Seller

Posted by Barry Ritholtz on Saturday, May 17, 2008 | 09:43 AM

in Psychology/Sentiment | Short Selling | Trading | Valuation

Nice Interview with my pal Doug Kass, the "anti-Cramer" in this week's Barron's, called "
Confessions of a Short Seller."

Doug runs a short only fund, Seabreeze Partners. He discusses a few key datapoints from the interview:

• As of April 30, flagship Seabreeze Partners Short fund was up 16.5% (vs 5.6% loss for the SPX)

• Since inception (January 2005) the fund is up 40.7%, versus a 15% gain for the S&P

• The amount of trading dollars that are in dedicated short pools are tiny: About $5.4 billion (Knowledge@Wharton). That's one-seventh the size of Fidelity's Magellan Fund.

• The $5.4B dedicated short hedge funds are a sliver of the nearly $2 trillion of hedge-fund assets.

• Over the past two decades, 58% of the issues on the New York Stock Exchange have advanced, while 42% have declined -- every year.

Here's an excerpt from the Interview:

What makes short selling so difficult to do effectively over a long period?

The objectives of a long buyer and a short seller are similar. Both want to produce uncommon returns by taking common risk -- typically by developing a variant view. Many believe short selling is a mug's game, but I don't, and thus far our results at Seabreeze have supported our opinion. But it is essential to maintain a disciplined short-selling strategy because, remember, risk and reward are asymmetric in selling stocks short. An investor can make only 100% if correct -- that is, if the stock sold short goes to zero. But you can lose an infinite amount if you're wrong as the stock keeps appreciating. And there is a gravitational pull of stocks higher over longer periods of time. So we use a very conservative approach to shorting.

Explain it, please.

First, we're diversified across company and industry lines. No individual security exceeds 2.5% of our partnership's assets and no industry sector exceeds 20% of the assets. We'll have 35 to 40 holdings at any given time. Second, "Wee Willie" Keeler, a .341 lifetime hitter who played in the early part of the 20th century, liked to say he "tried to hit 'em where they ain't." We try to do the same by being creative in our stock-selection process.

In what ways are you creative?

We strenuously avoid stocks whose short interest is high relative to the float, or companies whose shares have large short positions relative to their average daily trading volumes. Many short sellers have made the mistake of shorting valuation and have blown up during short squeezes. Avoiding them allows us to sleep at night and allows time for our negative fundamental catalysts to develop.

We also mitigate risk by avoiding leverage [borrowing to enhance the size of a position]. Historically, short sellers have taken concentrated positions, often in companies with small to medium capitalizations, and then used -- and abused -- leverage. That's a recipe for disaster, particularly when they select investments with too many shorts. The average market capitalization of our holdings is more than $10 billion. Shorting large-caps is another way to control risk.

Interesting stuff . . .

Source:
Confessions of a Short Seller
Interview With Douglas A. Kass, President, Seabreeze Partners Management
LAWRENCE C. STRAUSS
Barron's May 19, 2008
http://online.barrons.com/article/SB121097996687000019.html

Friday Evening Jazz: Marvin Gaye

Posted by Barry Ritholtz on Friday, May 16, 2008 | 06:30 PM

in Friday Night Jazz | Music | Video

Last week, while randomly channel surfing, I stumbled across a fantastic PBS documentary in the American Masters series, titled Marvin Gaye: What's Going On.

It was a terrific review of the wonderful music and troubled life of Marvin Gaye.

Those of you who are less familiar with early Soul and R&B owe it to yourself to learn a bit about Gaye, best known as an artist on the Motown record label in the 1960s and 1970s.

Gaye had a classic R&B voice -- described as "edged with grit yet tempered with sweetness." But he was much more than that: He was Motown’s renaissance man: A songwriter, composer, multi-instrumentalist, and record producer as well.

AllMusic: "Moving from lean, powerful R&B to stylish, sophisticated soul to finally arrive at an intensely political and personal form of artistic self-expression, his work not only redefined soul music as a creative force but also expanded its impact as an agent for social change."

You can explore Gaye's work a couple of ways: The one click method is either a box set or a Best Of. For the big 4 CD box, go with The Master 1961-1984. A less exhaustive approach is Every Great Motown Hit of Marvin Gaye.

I much prefer the albums over the greatest hits, The self-produced What's Going On was a landmark effort, described as "a dramatic shift in both content and style that forever altered the face of black music." A mix of percussion, soul and jazz, it has a remarkably sophisticated and fluid sound. Reviewers have called What's Going On a conceptual masterpiece.

The long-simmering eroticism implicit in much of Gaye's work reached its boiling point with 1973's Let's Get It On, one of the most sexually charged albums ever recorded; a work of intense lust and longing, it became the most commercially successful effort of his career

Top Ten Albums
1971: What's Going On (#6 U.S.)
1973: Let's Get It On (#2 U.S.)
1973: Diana & Marvin (#5 UK)
1974: Marvin Gaye Live! (#8 U.S.)
1976: I Want You (#4 U.S.)
1977: Live at the London Palladium (#3 U.S.)
1982: Midnight Love (#7 U.S.; #10 UK)
1994: The Very Best of Marvin Gaye (#3 UK)
2000: Marvin Gaye Love Songs (#8 UK)

Recommended Albums

• What's Going On
• Let's Get It On
• The Master 1961-1984 (Box Set)

• NPR: A Tribute to Marvin Gaye

videos after the jump

Continue reading "Friday Evening Jazz: Marvin Gaye"

Nasdaq Podcast

Posted by Barry Ritholtz on Friday, May 16, 2008 | 02:30 PM

in Investing | Markets | Podcast | Technical Analysis

A few readers have suggested doing a VLOG or podcast. The idea being I can finish a sentence without interruption. I have taken that under consideration, and may start that after the redesign rolls out. In the meantime, whenever I can do an interview that is a podcast/mp3/video roll, I will.

Earlier this week, I did an extended interview with the Nasdaq, and you can hear it in all its nasal glory below.

click for audio

Play mp3

What Are You Doing with Your Stimulus Check?

Posted by Barry Ritholtz on Friday, May 16, 2008 | 12:30 PM

in Consumer Spending | Economy | Taxes and Policy

Lifehacker has a poll asking people "What Are You Doing with Your Stimulus Check?"

Over 60% said they are either saving it all, or using it to pay down bills/debt:

Spending on essentials. 5.6%
Frivolous shopping spree! 12.6%
Saving it all. 23.8%
Paying bills or debt. 37.0%
A little of everything. 21.0%

Two caveats to this: As we have seen in so many surveys, what people say they plan on doing, and then what they actually do, are often two very different things.

Secondly, we don't know the demographics of Lifehacker readers -- geeks? middle class? higher educated? -- and they might skew differently than the nation as a whole.

Regardless, its an interesting data set.

~~~

Housing Starts Plunge 30.6%

Posted by Barry Ritholtz on Friday, May 16, 2008 | 10:38 AM

in Data Analysis | Real Estate

Does this look like a bottom to you ?

chart courtesy of Barron's Econoday

The Commerce Department released the Housing Starts data. It was not pretty

Construction of single-family houses in April dropped to the lowest level in 17 years. Builders broke ground on 692,000 single units at an annual rate, the fewest since January 1991.

Multiifamily units -- Condos, townhouses, and apartments -- rebounded for the month. Total housing starts were up 8.2% since last month, but plummeted 30.6% below the level of construction in April 2007.

WSJ:

Builders have been reluctant to build because demand for new homes has plunged and the supply of unsold property remained high. The latest data show new-home sales, for March, were down 36.6% from a year earlier. On Thursday, the National Association of Home Builders reported its index for sales of new, single-family homes slipped to 19 in May from 20. The gauge is based on a survey of builders asked about prospects for sales.

The overall WSJ article was good, despite the WTF headline: Housing Starts Post Surprise Rise. Bloomberg seemed to find a better balance int heir header: Housing Starts in U.S. Rise; Single-Family Construction Hits 17-Year Low.

Given the huge inventory overhang, weak housing starts is (perversely) a positive for the housing market!

Sources:
NEW RESIDENTIAL CONSTRUCTION IN APRIL 2008
Manufacturing and Construction Division
U.S. Census Bureau, MAY 16, 2008 AT 8:30 A.M. EDT
http://www.census.gov/const/newresconst.pdf

Housing Starts Post Surprise Rise
JEFF BATER May 16, 2008
WSJ, 9:51 a.m.
http://online.wsj.com/article/SB121094058802498537.html

Only 5% of Wall Street Recommendations Are "SELLS"

Posted by Barry Ritholtz on Friday, May 16, 2008 | 09:00 AM

in Investing | Psychology/Sentiment | Valuation

Here's a fascinating data point:

Only 5% of the fundamental research of the brokerage firms is a sell. That's up from 2% in the 1990s. Despite having paid $1.4 billion to settle the analyst/banking scandals of the 1990s and early 2000s, Wall Street is still disproportionately afraid of the word "Sell."

That's rather low, when you consider how many stocks underperform their respective indices each year.

There's a small sign of a potential change in this attitude: Merrill Lynch: "Starting in June, Merrill will require that its analysts assign “underperform” ratings to 1 out of every 5 stocks they cover. About 12 percent fall into that category now."

NYT excerpt:

"The bank [Merrill] analyzed stock performance over a decade and determined that from 1997 through 2007, on average, 37 percent of stocks in the MSCI world index and 40 percent of stocks in the Standard and Poor’s 500-stock index declined each year. The bank covers about 75 percent of the stocks in those indexes.

Under its new system, analysts cannot assign “buy” ratings to more than 70 percent of stocks they cover, “neutral” to more than 30 percent and “underperform” to less than 20 percent. (An underperform rating suggests the analyst believes the stock will either fall within 12 months or will rise less than competing companies with higher ratings.)

But some in the financial industry say it may be too late for research departments at Merrill or other investment banks to reclaim the credibility and prestige they lost after the technology stock bust. Hedge funds, which account for up to 75 percent of trading on some markets, conduct much of their own research and often pay twice the going rate on the Street for analysts. Many banks, by contrast, have cut research budgets." (emphasis added)

40% of the SPX? wow, that's higher than I would have guessed.

It would be a interesting to see a longer data run -- more than the 1997-2007 period, as it contained the bubble and crash period.

Also, I'd be curious to see how many stocks underperform, in terms of their marketcap as well as their trade weighted volume percentage on the NYSE and the Nasdaq.

Source:
Merrill Tries to Temper the Pollyannas in Its Ranks
JENNY ANDERSON and VIKAS BAJAJ
NYT, May 15, 2008
http://www.nytimes.com/2008/05/15/business/15place.html

Companies Cutting Hours Aggressively

Posted by Barry Ritholtz on Friday, May 16, 2008 | 06:27 AM

in Economy | Employment | Wages & Income

I have over the years discussed what a poor economic recovery this cycle has been in terms of job creation. Given the lack of robust job creation, its not a huge surprise that layoffs typical of most recessions have yet to appear.

Merrill Lynch's David Rosenberg notes it has become "economic myth" that the April employment report was benign. In particular, he notes that hours worked, one of the employment metrics reported by the BLS, is rapidly declining. In the April NFP release, hours worked plunged:

"Companies did not cut as many positions as expected, they cut the hours instead. The average work week plunged 0.3% (and, aggregate hours worked were down at an annual rate of 1% in the past three months), which, by the way, would be the equivalent of 400,000 job cuts.

This is a sign that labor market conditions and domestic demand are far softer than the headline suggests. What drives consumer spending inevitably is income growth. Average weekly earnings fell 0.2% sequentially in April in what was the largest decline in two years. This dragged the year-on-year rate down to 3.1% from 3.3% in March, 3.7% in February and the nearby peak of 3.8% posted last November in what is clear disinflationary trend in wages.

The rebound in the Household survey was all in part-time employment. While there was a nice rebound in the Household Survey, it was all in part-time employment – that is not the driver of confidence and spending. Growth in full-time jobs is what drives those things. And, full-time employment actually fell 375,000 in April and is down 572,000 year-to-date; of the folks who were working part-time in April, the number doing so because of “economic reasons” (mostly slack business conditions) surged 306,000 or 6.3% – again the steepest runup in two years. The diffusion indices fell through the floor to 45.4 in April from 48 in March – this measures the share of industries adding to payrolls and shows that even though the headline job loss was lower than expected, the decline was very broadly based across sectors. (emphasis added)

In case you missed the underlined text, employers cut back so many hours that it was the functional "equivalent of 400,000 job cuts."

This is not the sort of data you associate with economic recoveries.

Source:
Macro viewpoint: Debunking five myths
David A. Rosenberg, North American Economist
Merrill Lynch, 09 May 2008
http://tinyurl.com/6kjlhl

Previously:
Job Creation: Post-Recession Recovery Cycles April 05, 2008 http://bigpicture.typepad.com/comments/2008/04/job-creation-po.html

Kudlow on Ritholtz

Posted by Barry Ritholtz on Thursday, May 15, 2008 | 04:30 PM

in Financial Press | Media

Every time I think to myself, "Tonite is the night I might actually strangle this bastard with my bare hands," he goes and does something nice like this:
>

Big Picture Ritholtz

My friend Barry Ritholtz, author of the excellent Big Picture blog, did a great job last night defending his recession views on Kudlow & Company. The guests were stacked against him, but armed with his good humor and incisive economic analysis, Barry made his case. It was an impressive performance. Barry has been predicting recession for nearly two years. And while he hasn’t been exactly right, he hasn’t been exactly wrong either.

Incidentally, this morning’s drop in industrial production supports his recession case (even while many other indicators run counter to it). But one thing is certain: Barry’s warnings about rising headline inflation have proven most prescient. In fact, a populist election revolt against high food and gasoline prices is occurring right now.

Mr. Ritholtz is a political moderate – probably a moderate Republican when it gets right down to it. He is a capitalist. He is not a supply-sider. But he is a very smart, good-natured, good guy. For those in the political world, interested in following the hot topics debate in the financial world, you can do no better than reading his Big Picture blog. I read it everyday.

-Kudlow's Money Politic$ http://kudlowsmoneypolitics.blogspot.com/2008/05/big-picture-ritholtz.html

Or, if you prefer, the version on National Review Online:
http://kudlow.nationalreview.com/post/?q=NmEzMjNmNDhhNDYxYjRjZThlZmMwZjUzZDAwMWU1N2Y=

Or on CNBC.com
http://www.cnbc.com/id/24652210

Thank you for the sentiment, Larry.

4 National GDPs as US Regions

Posted by Barry Ritholtz on Thursday, May 15, 2008 | 02:30 PM

in Economy

We previously looked at Countries GDP as US States.

Today, we see GDP of the top four national economies in the world (after the US), expressed as US regions by GSP.

Via World Bank.

My First TV Review

Posted by Barry Ritholtz on Thursday, May 15, 2008 | 11:30 AM

in Financial Press

>
If you missed last night's Kudlow & Co., you can see the video here. While readers discussed the pros and cons of the appearance, Dealbreaker actually ran a review of it.

Kudlow & Co. Appearance (5/14/08) (The Big Picture)

We've taken some gentle shots at Barry Ritholtz before, but man, did he outclass'em on Kudlow last night. Going up a panel of, frankly, nutjobs, Barry was cool and logical, while the rest were, well, a bit nutty. The most ridiculous part was when they implied he was a hypocrite for owning stocks, while also thinking stocks might have further to fall. That was the point it was obvious that none of them really managed money before, or really had the slightest clue what he was talking about. At one point, Don Luskin said: "If your FusionIQ (the name of Barry's firm) ever gets to 100, short it." (jerk).

Thanks, guys. I should be only be so lucky as to have such reviews all the time...

Source
Opening Bell: 5.15.08
Joe Weisenthal,
Dealbreaker, May 15, 2008, 7:08am
http://dealbreaker.com/2008/05/opening_bell_51508.php

Withholding Tax Update: 23-Month Low

Posted by Barry Ritholtz on Thursday, May 15, 2008 | 10:00 AM

in Economy | Taxes and Policy | Wages & Income

We have previously reviewed the Uncle Sam's withholding tax data as a read into the overall health of the economy.

The most recent data point (March 13) shows W/H tax reaching a 23 month low. But we don't like to rely on any single data point, especially one from a volatile series. Instead, look at the overall trend -- is it moving up, or is it heading down?

At times, we have been critical of the perplexing read of this data by Charles Biderman of TrimTabs. Today, few words are necessary, as the charts speak for themselves.

Is this an economy in recovery, or one that is weakening?

charts courtesy of Matt Trivisonno

Sources:
Withholding Tax Haul Hits 23-Month Low
May 14th, 2008 at 3:32 pm
http://www.trivisonno.com/withholding-tax-haul-hits-23-month-low

DAILY TREASURY STATEMENT
Cash and debt operations of the United States Treasury
Tuesday, May 13, 2008
http://fms.treas.gov/webservices/show/?ciURL=/dts/08051300.pdf

Withholding Taxes Chart
http://www.trivisonno.com/investing/withholding-taxes-chart

Policy Shift: Can the Fed Identify & Pop Asset Bubbles?

Posted by Barry Ritholtz on Thursday, May 15, 2008 | 06:45 AM

in Commodities | Federal Reserve | Markets | Psychology/Sentiment | Trading

Interesting discussion in the FT Wednesday about a potential major shift in Fed philosophy: Maybe its a bad idea for Central Banks to passively wait for bubbles to pop.

I am not sure if the Fed will shift away from the Greenspan doctrine: "Inflate Bubbles & Clean Up he Mes After." Will the change be to something less disruptive, or will they throttle the growth side of the equation? That's the risk.

Perhaps one idea worth exploring might be not to not blow these bubbles in the first place.

Here's an excerpt from the FT:

"The US Federal Reserve is reconsidering the way it deals with asset price bubbles in the wake of the housing and credit bust, in a move that could see the central bank using regulation - or even interest rates - to fight unjustified increases.

Top officials are re-examining the Alan Greenspan doctrine that central banks should not try to tackle asset bubbles and should focus on mitigating the fallout when they burst.

They are open to the possibility that the Fed may have to adopt a different strategy in future. However, they have not reached any conclusions and could end up reaffirming their traditional hands-off stance . . .

The Fed has long stood out among central banks as the least willing to embrace the idea that it should "lean against the wind" when asset prices are rising rapidly. Former chairman Mr Greenspan famously argued that it was in practice impossible to identify bubbles before they burst, and attempts to prick them by raising rates were likely to do more harm than good."

Greenspan has claimed its impossible to identify bubbles in real time; Ben Bernanke has been more contemplative on the subject. He's said its "difficult" to know for sure when we are n a bubble.

Chairman, let me suggest a few data points worth considering:

• Standard Price Deviations: Is the asset class trading 2 to 3 standard deviations away from its traditional price metrics?

• Inventory: Is there a huge inventory build? Bubbles create the incentive to produce a whole lot more, be it Miami condos or dot com companies.

• Fundamentals: Has something shifted in the fundamental supply/demand equation that is impacting pricers, or is it pure speculation?

• Regulatory Changes: Has the government altered some part of the equation that might have changed the game somewhat?

There are others, but these are a good beginning.

Note that the inventory metric is why I have doubted commodities are a bubble; also I have long claimed that we did not have a national Housing bubble, but instead had a lending & credit bubble -- a subtle but important distinction.

By the same metrics, I agree with I agree Stuart Hoffman, chief economist of PNC Financial, who notes that the enormous volume of new condos in Miami in inventory are just that proof of a local bubble (I agree).

UPDATE: May 16, 2008 5:42am

WSJ:

First came the tech-stock bubble. Then there were bubbles in housing and credit. Chinese stocks took off like a rocket. Now, as prices soar on every material from oil to corn, some suggest there's a bubble in commodities.

But how and why do bubbles form? Economists traditionally haven't offered much insight. From World War II till the mid-1990s, there weren't many U.S. investing manias for them to look at. The study of bubbles was left to economic historians sifting through musty records of 17th-century Dutch tulip-bulb prices and the like.

The dot-com boom began to change that. "You were seeing live, in action, the unfolding of lots of examples of valuations disconnecting from fundamentals," says Princeton economist Harrison Hong. Now, the study of financial bubbles is hot.

Marketwatch:

Fed should deflate some bubbles, Mishkin says

The Federal Reserve should try to aggressively deflate some types of asset bubbles before they can harm the economy, Fed Gov. Frederic Mishkin said Thursday.

But raising interest rates isn't the way to prick a bubble, he said. And some types of bubbles, such as the dot-com bubble of the late 1990s, probably shouldn't be pricked at all, he said.

On the other hand, the housing bubble of this decade was the type of bubble that should have been targeted with closer supervision and tighter regulation to prevent widespread economic damage, Mishkin said.

The Fed should watch for bubbles that are associated with a fast expansion of credit, he said, because these bubbles have the potential to inflate bank balance sheets on the way up and destroy them on the way down.

Sources:
Fed looks at ways to fight asset bubbles
Krishna Guha
FT, Tuesday May 13 2008 18:05
http://us.ft.com/ftgateway/superpage.ft?news_id=fto051320081916203957

Bernanke's Bubble Laboratory
Princeton Protégés of Fed Chief Study the Economics of Manias
JUSTIN LAHART
WSJ, May 16, 2008; Page A1
http://online.wsj.com/article/SB121089412378097011.html

Fed should deflate some bubbles, Mishkin says
Monetary policy ineffective, but supervision can break harmful feedback loops
Rex Nutting
MarketWatch, 7:04 p.m. EDT May 15, 2008
http://tinyurl.com/4wk673

Kudlow & Co. Appearance (5/14/08)

Posted by Barry Ritholtz on Wednesday, May 14, 2008 | 05:30 PM

in Media

Another appearance on Kudlow & Co. tonite, from 7:00 to 7:30pm (ish).

Also on tonite: David Malpass, Bear Stearns chief economist, Jimmy Pethokoukis, senior writer at U.S. News & World Report, Andy Busch, global FX strategist at BMO Capital Markets, Jim Awad, chairman of WP Stewart Asset Management, and Don Luskin, chief investment officer, Trend Macro.

Note that Jimmy Pethokoukis and I have a bet as to whether or not there is a recession or not.

UPDATE: May 14, 2008 11:47pm

Considering it was 4 on 1, I thought I held up pretty well.

Click for video

Continue reading "Kudlow & Co. Appearance (5/14/08)"

Coming Soon: $200 Apple iPhone 3G

Posted by Barry Ritholtz on Wednesday, May 14, 2008 | 04:30 PM

in Consumer Spending | Technology | Web/Tech

Hints, signs and portents are starting to pile up that Apple (AAPL) will soon deliver unto the world the 3G iPhone that has been heralded in prophecy ever since the current model was born.

That's according to GMSV, who also note:

* Apple announced there are no more iPhones left in its U.S. and U.K. online stores.

* Piper Jaffray analyst Gene Munster says the devices are in short supply at many of the retail outlets as well.

* AT&T’s product listing includes a new option — “iPhone Black,” the rumored color of the 3G model.

* Apple has confirmed to Fortune that Steve Jobs will deliver a keynote address on June 9, the first day of Apple’s World Wide Developers conference.

* AT&T told retail employees not to schedule any vacation between June 15 and July 12 to ensure sufficient staffing for “an exciting Summer Promotional Launch.”

I have steadfastedly refused to buy the first gen, 2G iPhone. I have no need for a pricey gadget that only works on a slowpoke network, and neither do you. (Not that this small quibble prevented 10 million people from buying the gorgeous toy).

However, combine the above with Fortune's report of a forthcoming AT&T big price cut (bringing the price down to $199 for a 2 year contract) and I don't see how I can avoid becoming part of the iPhone nation. . .