Late August Linkfest: Week-in-Preview

Sunday, August 26, 2007 | 06:30 PM

The last official week of the summer begins Monday. Expect light trading volumes, as many traders take a vacation week or an extra long Labor Day Weekend. Almost there!

Earnings reports are light, with few noteworthy conference calls on the calendar. Mortgage biggie Freddie Mac before the bell Thursday, and after the close, we hear from Dell. They are expected to go over their restated earnings.

The Federal Reserve has their Economic Symposium in Jackson Hole, Wyoming. The keynote speech is by Fed Chairman Ben Bernanke on "Housing and Monetary Policy." No word on whether the Fed will be discussing the credit crunch.

Speaking of the credit markets, the WSJ quotes Jack Ablin of Harris Private Bank as to what we can hope for this week: "No news is good news on that front." That sounds just about right.

There are quite a few notable economic reports this week:

-Monday, we hear from the ever optimistic National Association of Realtors (NAR) on U.S. home resales for July. (June was down 11.4% year-over-year)
-Tuesday, we hear from the Conference Board on the consumer confidence index. Last month, the index surprisingly jumped to 112.6 in July from 105.3 in June.  Consensus Forecast for August 07 is for a slip back down towards 105.0.
-The release of the August 7 FOMC Minutes, Tuesday 2:00 pm is likely a non-issue, as events have overtaken whatever was said way back then (was it only 3 weeks ago? seems like forever ago!).
-Thursday, we get Q2 GDP (1st revision). This is already old news, and uness this second report of the quarter's economic activity its radically different from the July 27th advance report, it is most likely a non-event.
-On Friday, we get personal income and consumption. Last quarter, spending weakness was in durables and motor vehicles.
-NPAM and Factory orders are also Friday.
-Finally, University of Michigan's Consumer sentiment

An unusually number of positive forecasts in today's week in preview alone is cause for celebration. Once again, linkfest time!

INVESTING & TRADING

Cash-Rich Tech Companies Can Sidestep Credit Crunch: With the consumer representing more than half of total semiconductor consumption, the possibility that suddenly house-poor people will just stop buying does give pause. But even as Countrywide Finance, among others, was wobbling last week, there was plenty of evidence that tech companies that can take market share away from entrenched incumbents can still do very well. (Barron's)

• The conventional wisdom is that the Fed will cut, and it will be good for equities. A few columns challenge both the expectation and the reaction:

-Five Reasons: Why the Fed Won’t Cut Rates   
-Rate cuts won't cure ailing market (MSN MoneyCentral)
-Falling Rates, Rising Stocks?  (BusinessWeek)      
-Fed Rate Cuts Are a Possibility, Not a Certainty (Bloomberg)
-Fed rate cut? Don't bank on it (CNNMoney.com)
-As Banks Borrow From the Fed, Odds of a Rate Cut Slip (Barron's)

• Yale professor Robert Shiller gives us A Psychology Lesson From the Markets: Rising prices encourage investors to expect more price increases, and their optimism feeds back into even more increases, again and again in a vicious circle. As the boom continues, there is less fear of borrowing heavily, or of lending heavily. In this situation, lower lending standards seem perfectly appropriate — and even a fair way to permit everyone to prosper. (New York Times) 

Degunker: A biotech best known for failure may have invented the most powerful cholesterol drug ever. (Forbes)

Start-up sees 1,000 "brains" on one microchip: Tilera Corp, a Silicon Valley semiconductor start-up, is launching a single microchip with 64  processing units, or cores, in a technological jump generations ahead of the mainstream.  (Reuters)

Eco-Capitalists Save Mother Nature By Charging for Her Services: The eco-capitalists are coming, and they aren't wielding Thoreauvian platitudes about the sanctity of nature. Their jargon is far less lyrical: ecological assets, environmental markets, ecosystem services, natural capital. For these guys, biofuels and long-lasting lightbulbs are fine but they're nothing more than a short-term play. The real money is in nascent markets indexed to the health of Mother Nature. (Wired) 

Slate looks at Who isn't getting paid next January? Bonuses at hedge funds and Wall Street firms are a topic of obsession in the financial press—and in New York generally. (In 2005, New York magazine neatly dissected how Goldman Sachs would divvy up a projected $11 billion bonus pool.) Whether they come in the form of Goldman CEO Lloyd Blankfein's $53.4 million haul last December, or in the form of a $1.7 billion payday for a top hedge-fund manager like James Simons of Renaissance Technologies, bonuses are important economic leading indicators for New York-area real estate brokers, art dealers, and gold diggers of all types. The ritual reporting of bonuses provokes envy in some (fellow graduates of MBA programs that are doing well, but not so well), and self-loathing in many (Phi Beta Kappa grads who chose to go into anthropology instead of finance).

21 Bullish Predictions For Tech   

The Jury's Still Out: "RING THE BELLS, THE STOCK MARKET has bottomed! The capitulation of the bulls last week was the flush heard around the world so all of the excesses and problems have finally been cleaned out of the market. Believe that and I've got a bridge to sell you." (Barron's)

SIVs, next shoe to drop in global credit crisis? Wall Street should keep its eye on a little-known coterie of investment companies run by European banks called "structured investment vehicles," or SIVs, which are having a tough time raising short-term funding. (Reuters)

Shorting China: China's stock market has defied the law of gravity, pushing the benchmark Shanghai Composite Index up 91% this year to its latest record Friday -- despite lofty valuations, rising interest rates and global market tumult. When markets soar like China's has, investors gleefully bet on a crash by selling the market short. Others will try to hedge their positions, giving up potential gains to limit their losses. (Wall Street Journal)

Indexes and the Calendar This is a market that is prompting many concrete thinkers to utter the great, immortal "if." What if the stock market is ready to advance? What if the stock market is ready to retest recent lows? What if the Federal Reserve actually lowers interest rates? What if, what if, what if. (Barron's)

 

ECONOMY

The Wall of worry continues to build:

Catching up with the Fed's Thinking:  Think your job is hard? Consider what the Fed is trying to do: restore investor psychology,fix seized up liquidity, and  cushion the blows to a slowing economy, while simultaneously avoiding rekindling inflation, resurrecting the Greenspan Put (i.e., "Moral Hazard"), and preventing a meltdown in the US Dollar. Piece of cake!  See also Mr. International, on Dallas Federal Reserve President Richard Fisher.

U.S. and Asia unlinked? Hardly So, Asia finally unshackled itself from the U.S. economy. Riiiight! Just ask executives at Mitsubishi UFJ Financial Group. Shares in Japan's largest bank fell to a two-year low last week amid losses from the U.S. mortgage crisis. Sumitomo Mitsui Financial Group also said it had recorded losses in securities backed by subprime loans.After the U.S. Federal Reserve Board cut its rate Friday, Asian markets have largely rebounded this week.Arguments that Asia has decoupled from the United States suddenly look, dare I say, rather subprime. (International Herald Tribune/Bloomberg)

AMERICAN CONSUMER LOOKS INTO THE ABYSS Buckling under soaring debt payments and plunging home equity, how much longer can the 'fabled' U.S. Shopper carry the weight of the economy? (National Post) See also Save or Splurge ?

• A British angst fest:

-Brace yourself for the insolvency crunch:  Be very careful. Interest rates in Europe and Asia are that much higher now, with delayed effects starting to bite hard. Japan’s economy has stalled to 0.1pc growth in Q2; the euro-zone has slowed to 0.3pc; and China’s refusal to import (by currency manipulation) makes it a drain on world demand. Above all, the credit bubble that perpetuated the rally of the last eighteen months beyond its natural life has definitively burst. (Telegraph)

-The next financial crisis starts here: Washington is deserted in August, so demands for a political response to the financial-market debacle have been muted. Rest assured, this will change. The problem will not be dealt with by next month - things could easily get worse before they get better - and some appealing suspects are just asking for a regulatory beating. Enron and the other corporate scandals begat Sarbanes-Oxley. What will the subprime mortgage meltdown bring forth?  (FT)

• Fed study: Rediscounting under Aggregate Risk with Moral Hazard (pdf

Inflation Risks Vanish in Financial Market Haze: It took a fair amount of kicking and screaming from financial markets last week to prod the Federal Reserve into action. But act it did, cutting the discount rate by 0.5 percentage point to 5.75 percent before the New York Stock Exchange opened Friday.The unexpected action had an immediate and positive impact on global stock markets, which reversed earlier losses. It took some of the bloom off the three-month Treasury bill, whose rate had tumbled more than 100 basis points in the span of a week.  (Bloomberg) See also ECB Signals Rate Increase Is Still Likely



HOUSING

• RM's Dave Merkel gives us a mini linkfest in Thoughts on the Real Estate Markets

Truth-in-Lending Disclosure Failure Leads to Mortgage becoming "UnSecured" What happens when lender fails to comply with the TILA rules? The borrowers are allowed to RESCIND THE LOANS AND VOID THE MORTGAGES ON THEIR HOMES. The mortgage lender is then just another unsecured creditor, who must get in line behind everyone else who may have filed a lien on the property. Who ever files first (Credit card, auto finance, doctors, etc.) has first priority. That makes the mortgage loan itself unsecuritized -- and worth a lot less -- due to the increased risk of loss of collateral.

• Doug Kass and Bob Toll have an interesting chat towards the end of the Toll Brothers Conf Call (Call it negative reality and positive hopes)

The New York Times reports Drop Foreseen in Median Price of U.S. Homes: The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950. (Really?!? Who ever could have seen THAT coming?) also, Condo Troubles Further Squeeze Property Lenders

U.S. Foreclosures Rise Sharply in July: Foreclosure filings rose 9 percent from June to July and surged 93 percent over the same period last year, with Nevada, Georgia and Michigan accounting for the highest foreclosure rates nationwide, a research firm said Tuesday. (AP)

Home prices boosting U.S. household debt: Kohn - Rising home prices and innovations in the financial sector are the two biggest factors in the spike in U.S. household debt and the related decline in savings, Federal Reserve Vice Chairman Donald Kohn wrote in a research paper presented Sunday. (Marketwatch)   

• duh:  Realtors See Drop in Ranks (AP)   



TECHNOLOGY & SCIENCE

• I am simply astounded at how much Digital Cameras have dropped in price. For almost half of what I paid two years ago, cameras today have much more features and much higher resolution.

The World According to ...Mark Cuban: The internet is "dead and boring," Cuban says in an interview with Portfolio.com. "We have reached the point of diminishing returns with today's internet. The speed of broadband to your home won't increase much more in the next five years than it has in the last five years. That is not enough to work as a platform for new levels of applications that will require much, much higher levels of bandwidth."

• A torn rotator cuff, shorn cartlidge, and other wear & tear has me looking at Voice Recognition Software (Its not the years, its the miles). Any suggestions from readers as to what's better or worse?

If There’s a High-Definition TV in Your Future, Wait Till After the Holidays: Isn't this true about every tech gadget?   (New York Times)

•  Time travel could be possible ... in the future 

The best way to search video on the internet

Sun Microsystems changes ticker to JAVA: It's not as dramatic, or as expensive, as changing the company name, but Sun Microsystems is trying to send a message by switching its stock ticker symbol from the unpronounceable but historically significant SUNW to the snappier JAVA, the now ubiquitous software that Sun introduced 12 years ago.

• A freak storm upends over 3000 trees in Chicago:  History, memories uprooted as trees fall (Chicago Tribune)   
 



MUSIC BOOKS MOVIES TV FUN!

Off the record: In recent years, the economics of pop music have been upended. The market for CDs has collapsed, and not even the rise of legal downloading can offset the damage to record companies. Meanwhile, demand for live performances has rocketed.

There is a story doing the rounds in the US that says a lot about the state of the music business. It concerns a young rock band who decided to stop selling their CDs at concerts. Selling CDs has, for many years, been a good way for an act to reclaim the margin that would otherwise have been snaffled by a retailer. But it made no sense to this band once they discovered that by selling CDs for $10 they were cannibalising sales of their $20 T-shirts. (Prospect)   

Score From ‘Brazil’ Wildly Popular, For Some Reason   

Hard To Tell If Wikipedia Entry On Dada Has Been Vandalized Or Not

OK, you experts, I need your insight into Voice Recognition Software. Any suggestions from readers as to what's better or worse? Please let me know!

Enjoy the rest of your weekend! 

~~~

Got a comment, suggestion, link idea? Or do you just have something on your mind? The linkfest loves to get email!  If you've got something to say, then by all means please do.

Sunday, August 26, 2007 | 06:30 PM | Permalink | Comments (7) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00e54ee5ffd88834

Listed below are links to weblogs that reference Late August Linkfest: Week-in-Preview:

Comments

Great linkfest, Barry.

But the real question on my mind in these turbulent times is:

Where's Larry Nusbaum?!

Posted by: MTHood | Aug 26, 2007 7:38:39 PM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner