Memorial Day Weekend Linkfest, Part II
Yesterday, we looked at the week that was. This morning we preview the week that will be:
Traders returning from the weekend will slowly ease back into the swing of things. The week starts slowly, but its backloaded with data. On Wednesday, the last Fed meeting minutes get released. Thursday sees the revised Q1 GDP; the initial growth data was 1.3% (annualized), but even that punk number may turn out to be too optimistic. Consensus has been lowered to 0.7%. The silver lining is so poor a growth rate could revise hopes of a Fed rate cut sooner rather than later.
Friday is chock full of data: Personal income and spending gets reported, as does the PCE Deflator -- a key Fed inflation indicator. Also on Friday: ISM, University of Michigan's consumer sentiment, and May car and light-truck sales.
But the main economic event for the week is the May Non-Farm Payroll and unemployment data, via the Bureau of Labored Statistics. Consensus is for 140,000 new jobs, and unemployment rate is expected to remain unchanged at 4.5%.
A slew of retailers are scheduled to report this week also: Costco, Tiffany, Sears Holdings all release quarterly earnings data. Also on the earnings calendar: New Wal-Mart partner Dell reports fiscal Q1 earnings Thursday.
For you techno-heads, the Wall Street Journal's 5th "D: All Things Digital" conference is this week. There are a bevy of tech heavyweights scheduled to present, but headline event is a rare joint interview with Microsoft Chairman Bill Gates and Apple CEO Steve Jobs.
The the largest mainland Chinese IPO is scheduled for Friday -- solar-power company LDK Solar Co. Ltd. It launches on the New York Stock Exchange Friday, and is expected to raise nearly half a billion dollars. The WSJ noted that the last Chinese solar company, China Sunergy, "soared 51% on its first day of trading on the Nasdaq Stock Market earlier this month, making it the best debut by a Chinese IPO in the U.S. this year."
Warm up that mouse wrist -- its clicking time -- Here's our look ahead at the coming week:
INVESTING & TRADING
• Skeptical Investors May Help Fuel Rally: Most chartists are familiar with trends, volume and momentum. Sentiment, or how people in the market think, is usually given short shrift simply because the data are not readily available to most investors. But sentiment analysis is a key piece of the technical puzzle. It tells us when the majority of investors are thinking alike and in the words of Humphrey Neill, author of The Art of Contrary Thinking, "When everyone thinks alike, everyone is likely to be wrong." (Barron's)
• Relative Short Interest/Total Market Float: You need more than high short interest to bet on a longer lasting market correction.
• A Business 2.0 Two-fer:
• The Psychology of Trading Professor Andrew Lo (MIT)
• Gold tells a sad story of asset deflation in the future: Gold is telling a different tale than the equity markets, but the equity markets have hundreds of billions of private equity dollars (in the US), and a huge, though less quantifiable, pot of domestic savings (in China) to propel them beyond sensible levels. Gold is telling us that there is more asset price deflation ahead of us in the US, principally through a housing market that will be weaker for longer, and a commodities price peak later this year. (FT)
• Why Japan Hasn't Joined the Global Celebration: Japan's economy and corporations are enjoying the most stable period of growth they have had for decades. So why is Tokyo's stock market performing so poorly compared with others? Since the beginning of this year, the Nikkei Stock Average of 225 companies -- which rose 0.14% or 25.07 points to 17705.12 yesterday -- is up less than 3%, compared with nearly 9% for the Dow Jones Industrial Average. Most other stock markets also are doing better than Tokyo. The DAX index in Germany is up 17%. The Shanghai Composite Index has shot up 56%. (Wall Street Journal)
• The US Dollar may be setting up for a counter-cyclical snapback: Dollar Rebound?
• How to Hire Brokers Abroad: It's getting easier for you to open a brokerage account -- in Botswana. And not just there, but also in many bigger and more important markets, ranging from London and Hong Kong to Auckland, New Zealand, and Cairo, Egypt. Around the world, local banks and brokerages have been rolling out online services that let Americans and international individual investors open accounts to buy and sell foreign stocks directly. Their goal is to cash in on the booming interest world-wide in investing in foreign countries. (free Wall Street Journal)
• Citibank Annual Strategic Investor Conference (May 18 2007)
The Wall of worry continues to build:
• Floyd Norris of the New York Times counsels Wait a Few Months Before You Believe the Numbers: It is the newest economic statistics that usually get all the attention as investors and analysts try to gauge the health of the economy. But sometimes the statistics that take the longest to arrive can provide the most important information, particularly when they point to inflection points in the economy. So it may be with jobs data that the Bureau of Labor Statistics released this month for the third quarter of 2006. The new data calls into question the previous conclusion that employment grew at a strong rate in late 2006.
• Is U.S. Ceding 'Master of the Universe' Status?: China is trying to slow its breakneck pace of economic growth. The U.S. could use a little of what China has too much of. Are the two countries working at cross purposes? The notion of a global growth cycle, with countries taking their cues from the U.S., is being challenged as Asia's developing economies continue to boom amid a slowdown in the U.S. In this new age of globalization, synchronicity is out, decoupling is in. Yes, China and India are growing in ways that may be independent of the business cycle. (Bloomberg)
• A stretched credit cycle, a more savage downturn: High finance has never been more sophisticated. Bankers have never been more clever. Yet in the US subprime lending boom, banks fell over themselves to advance 100 per cent loan-to-value mortgages to out-of-pocket deadbeats. According to industry folklore, even an insolvent arsonist was given accommodation. Lending standards to private equity are collapsing just as risks rise and returns are being competed away. (FT)
• Fed Plans to Revise Credit Card Rules: Credit card companies would have to disclose interest rates and fees in clearer, easier-to-understand language under proposed new consumer-protection rules that could take effect by year-end. The proposed rules, which the Federal Reserve Board unveiled yesterday after a 2 1/2 -year study, would be most significant change to the nation's truth-in-lending regulations in 26 years. (Washington Post)
• How Worrisome Is a Negative Saving Rate? (NY Federal Reserve)
• Consumers pinched by rising gas prices: The usually unflappable U.S. consumer is being pinched by high gasoline prices, and that's likely to slow economic growth this summer, economists say. Average retail gas prices jumped by 12 cents to a record $3.26 a gallon last week, the Energy Department reported Monday. Gas prices are up nearly 50% since late January, one of the largest sustained increases ever recorded by the government. Over the past two decades, gasoline price spikes have proved to be relatively temporary, so consumers didn't really change their behavior by cutting back their discretionary spending in other areas. By the time consumers got around to changing their behavior, prices had fallen back. This time, it could be different. (Marketwatch)
• Home auctioneers are back in action: A sign of the distressed real estate market and growing volume of foreclosures, the auction of 92 homes, condominiums and apartment buildings in Los Angeles, Orange and Ventura counties was the kind of event not seen in the Southland for more than a decade. In fact, the company that staged the auction — Real Estate Disposition Corp. of Irvine — came out of hibernation to do it, said its chairman, Rob Friedman. A sister firm, LandAuction.com, conducts sales of land, but, Friedman said, Real Estate Disposition last conducted big home auctions during the real estate bust of the early to mid-1990s. (L.A.Times)
• Are NYC apartments messing with inflation measures? See OER, CPI and the Fed: A Strange Love Story and OER / CPI and New York Rentals
• How Some Agents Tout 'Green' In Seeking an Edge With Buyers: Some real-estate brokers are beginning to tout their environment-friendly credentials to get an edge in a slowing housing market. But the brokers are discovering that selling green is harder than talking about it. Living in homes boasting solar panels and other energy-saving additions is becoming more mainstream, but brokers must still convince developers and buyers that green features are worth the added cost. And even if clients are eager to buy, there is a shortage of properties offering the features. (Real Estate Journal)
MUSIC BOOKS MOVIES TV FUN!
• Weekend Jazz: Oscar Peterson: After recording and performing for over half a century, Oscar may be the most recorded piano players of all time. His stunningly complex yet elegant and soulful playing worked equally well on ballads, uptempo numbers as well as blues. Check him out.
• The Larry Sanders Show could very well be the best television comedy of all time, edging out Seinfeld (and blowing past I Love Lucy, The Honeymooners, The Simpsons, The Office, the Dick Van Dyke Show, MASH, and the Mary Tyler Moore Show).
• On a related note, Dick Cavett on What does it take to be a comedy writer?
• Interesting concept for a new book: The Cult of the Amateur: How today's Internet is killing our culture
That's all from an overcast Sunday morning out in the Hamptons. Even if it doesn't burn off, I am loaded for entertainment this weekend. Don't forget the SPF 15 -- you can get burned even when its cloudy!
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Re: I completely disagree with FT nearsighted view that “gold tells a sad story of asset deflation in the future”. I am very disappointed with myopic analysis from FT – completely ignoring the facts of gold being overvalued and USD artificially undervalued (thanks to our friends from the Middle East and Russia who have been constantly converting petrodollars into Euros for political reasons). Hello FT! Is anybody home? What about considering the simple fact that gold is historically overvalued and USD is historically undervalued, both need to return back to their historical norms. It has nothing to do with asset deflation in the future.
Re: I like John P. Hussman’s analysis but I disagree that future market performance can be extrapolated from past historical relations between S&P 500 yield and 10-year Treasury yields. It is not so simple. There are many other factors to be considered. The world is different now from what it used to be in the past and demand for the treasuries now is different from what it used to be in the past; therefore, the historical relationships between S&P 500 yield and 10-year Treasury yields will not necessary hold true in the future. I think psychology and future expectations for growth are more important to consider than past historical relationships.
Posted by: Rosie Pinguis Sus Scrofa | May 28, 2007 12:05:55 AM
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