Linkfest April Ides
A midweek dip was shrugged off with a strong finish to the week. The Dow Jones Industrial Average tacked on 0.4%, while the S&P500 gained 0.6%. The Nasdaq was the big winner this week, adding 0.8%, with the Russell 2000 a close 2nd, adding 0.7%.
In the coming week, earnings season ramps up. Barron's Trader column notes that "investors have been primed for pain: the first quarter of -- gasp -- single-digit profit growth after a seeming eternity of double-digit gains." But if investors are truly prepped for the worst, it won't take much to surprise to the upside.
The economic highlight this week is likely to be CPI on Tuesday.
And an interesting sidenote about this week's linkfest: The market articles are nearly all upbeat, while the economic and housing links are almost uniformly negative. What gives with this? I guess that's just the way the links crumbles.
On to the linkfest:
INVESTING & TRADING
• Stocks Are Back on Their Feet As Investors Applaud Profits: Upbeat inflation news and optimism about early corporate-profit reports are taking investors' minds off broader economic weakness. The Standard & Poor's 500-stock index has recovered the ground it lost during late February's downdraft. The Dow Jones Industrial Average has nearly done the same, as has the Nasdaq Composite Index. (WSJ)
• Profits May Be Fickle Oracles This Quarter: Wall Street is about to get information on one of the stock market's biggest drivers -- and one investors haven't focused on lately: corporate profits. Whether, and how, the profit news surprises investors is likely to be the main determinant of the market's direction in the next few weeks (free WSJ)
• Short Sellers Target Small-Company Shares as U.S. Growth Slows: What? There are short sellers left?
• Contrarian Play: Why Investors Should Consider Real Estate: With housing prices softening and subprime lenders tanking, investors have been running from anything that smells of real estate. But they may be bailing too quickly, as some parts of the sector are still doing well. (Real Estate Journal)
• Why China Need Not Fear U.S. Economic Slowdown (free WSJ)
• Technically speaking, Stock Market Running on Empty?: The stock market has put on a nice show with the Dow Jones Industrial Average rising some 5.5% off its March 14 intraday low. Along the way, it has ignored several technical barriers and even saw one major index, the NYSE comp set a new closing high. But from the start of the rally through this week's action, trading volume has been conspicuous by its absence. Without volume, the market will soon run out of fuel, and under such conditions we cannot expect it to run much longer (Barron's)
• His Fund Was Phony, But the Bars Are Real: Forget 2 & 20 -- this guy charged 100%... (Trader Magazine)
• Fascinating look at Commodity Prices in Babylon 385 - 61 BC
The Wall of Worry now looks like the Great Wall of China:
• All this week, I debated Don Luskin about the economy: The Capital Commerce DebateUS News & World Report) (
• Economy Enemy No.1: Soft Capital Spending: Housing worries are giving way to concerns about weak business spending as the biggest cloud hanging over the U.S. economy, a WSJ.com survey found. Still, economists again cut forecasts for home prices. (free WSJ)
• The Coming Tax Crash: "Speculation" based taxes have been are large portion of the Federal government's tax rise; meanwhile, states are seeing sales based tax revenue fall. Slate's Dan Gross asks: Are federal tax revenues on the brink of collapse?
• IT LOOKED LIKE A JOB BOOM, BUT IT REALLY ISN'T : So why was the March jobs number so strong? Give credit to the birth/death model. In March the Labor Department added 128,000 jobs to its count that the government thinks were created by newly formed companies. So this estimate accounted for much of the month's 180,000 gain. And the optimism - as well as the confusion - will only grow when the April job figures come out. (NYPost)
• 2007 called "awful year" for boat market: “While there are many factors at play, we believe softness in the housing market, especially the Florida market, is the largest factor influencing consumer purchase behavior.” (Boating Industry)
• Defaults Rise in Next Level of Mortgages: Some of the problems afflicting mortgages sold to borrowers with weak, or subprime, credit increasingly appear to be cropping up in loans made to homeowners who were thought to be less risky. (New York Times)
• Housing Boom Tied To Sham Mortgages: Many experts have concluded that the nation's real estate boom of recent years was fueled in part by weakened lending standards that sparked excessive demand and drove up prices. Now, some are worried that the looser standards may have permitted a boom of another kind -- a big expansion of mortgage fraud. (Washington Post)
• Realtors Forecast Falling Home Prices: The National Association of Realtors, which has long proclaimed that U.S. home prices haven't declined on a nationwide basis since the Great Depression, now says they are likely to do just that this year. (Real Estate Journal)
• Heebner Says Home Prices May Fall 20% Amid Bad Loans: Kenneth Heebner, manager of the top-performing real-estate fund over the past decade, said U.S. home prices may plunge as much as 20 percent because of rising defaults on riskier mortgages. (Bloomberg)
• Builder tells subs to cut prices mid-contract: Home builder Lennar Corp. has sent letters to its subcontractors in Southern California, Nevada and other states, telling them to cut their prices by as much as 20% and resubmit invoices for work not yet paid for. The letters said the subcontractors have a choice of either cutting their invoice prices or being shut out of bidding on Lennar projects for the next six months. In some cases the work has already been completed. (Contractor Mag.com)
• Broker Universe: Real life tales of desperate brokers seeking lenders for their "non-traditional" borrowers.
• Reversal of Fortune: The formula for human well-being used to be simple: Make money, get happy. So why is the old axiom suddenly turning on us?
• Most Americans See Recession in the Next 12 Months: Most Americans expect a recession within a year and disapprove of President George W. Bush's handling of the economy even though the unemployment rate is at a five-year low, a new Bloomberg/Los Angeles Times poll found. Six in 10 who were surveyed predicted a recession, similar to the 64 percent who anticipated the economy would contract in a December 2000 poll by the Los Angeles Times three months before the last decline. (Bloomberg)
• How to scare bank robbers? Try smiling: What’s the best way to make a bank robber turn around and walk out the door empty-handed? Try a handshake and a smile. Excessive friendliness is the key to the “Safecatch” system created by FBI Special Agent Larry Carr. The premise is that an overdose of courtesy will unnerve would-be robbers and get them to rethink the crime. (AP)
TECHNOLOGY & SCIENCE
• Behind the Fall of Imus, A Digital Brush Fire: This time it was different. The target was a sympathetic team of young athletes. In the ensuing furor, the lucrative and often vulgar business of talk radio found itself running into new limits, as the Internet sent Mr. Imus to millions of PC screens, driving executives, advertisers and employees to distance themselves from his racist words. (free WSJ)
• Apple Shares Down Slightly On Leopard Delay; Analysts Largely Unconcerned (Barron's Tech Trader Daily) Also, increasing Pressure to launch iTunes monthly fee. (Telegraph)
• Earth to Bloomberg: the Gold Fields bid story is a hoax: The wire service gets punk'd (original article here)
• Revolution, flashmobs, and brain chips. A grim vision of the future from Britain's Minister of Defence (Guardian)
MUSIC BOOKS MOVIES TV FUN!
• Always Expect the Unexpected: Interview with Nassim Nicholas Taleb in Wired. Taleb's follow up to Fooled by Randomness: The Hidden Role of Chance in Life and in the MarketsThe Black Swan: The Impact of the Highly Improbable. (No answer as to why there have been no reviews out yet). will be out this week. Its titled:
• To those of us who grew up in a certain era, Kurt Vonnegut was one the most interesting satirical novelists of the time. If you haven't read Cat's Cradle or Slaughterhouse Five, you've got some homework to do . . .
• Hysterical Kodak commercial (wait for the 2nd half)
• The little-known transcontinental burrito tunnel, linking San Francisco and NYC. "By the time they reach Cleveland the burritos are fully heated through and traveling uphill at about twice the speed of sound:" (via kottke)
This linkfest was powered by James Brown's Funky People. Believe it or not, this weekend, we are expecting a Nor'Easter -- and Snow in the NorthEast, where Old Man Winter refuses to go quietly.
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Extension of the Lushkin Paradigm:
GDP minus housing was 3.7; then it follows that job growth minus birth/death was 52,000.
By the way, the April jobs data will be a real hum dinger as the B/D model emphasizes April as the biggest job creation month.
Posted by: Winston Munn | Apr 15, 2007 6:25:03 PM
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