Halloween Linkfest: Week in Preview

Sunday, October 28, 2007 | 06:30 PM

Yesterday, we looked at the week gone by; Today, we look at the week that will be.

Barrons_calAll eyes will be on the Fed: The two day FOMC meeting begins Tuesday, with the policy announcement Wednesday at 2:15 (insert the Halloween trick-or-treat cliche or your choice here). While a quarter point cut is widely expected, some people are still agitating for another half a point cut. Via the Wall Street Journal comes this quote from Lee Hardman, a currency economist at Bank of Tokyo Mitsubishi in London: "The potential for a 50-point cut should not be ruled out, given the rapidly deteriorating conditions in the housing market and dislocated financial-market conditions." (Greatest story never told my arse).

A half point cut certainly would goose the markets initially. The more ominous implications -- about inflation and why the Fed was panicking -- might take longer to have any resonance.

After the FOMC, the October employment and non-farm payrolls report is the big data point for the week.  due on Friday from the Labor Department could do even more to set interest-rate expectations. The usual employment related data points are also out earlier in the week: On Wednesday, we hear the ADP Employment Report, as well as the Employment Cost Index; Thursday has the Monster Employment Index, the Challenger Job-Cut Report, Jobless Claims, and Personal Income and Outlays.

Also released this week are the first look at Q3 GDP (advanced) numbers, ISM Mfg Index, and Pending Home Sales Index. My personal views on GDP is that, given how artificially low the official inflation data is, GDP will be commensurately -- and artificially -- high.

Not artificially high are oil company revenues. he wild card for the major integrated oils is the widening spread between gasoline prices and crude. That may hurt refining margins -- and profits. Exxon Mobil (XOM),  Sunoco (SUN) and Constellation Energy (CEG) report Wednesday;  On Thursday, its Marathon Oil (MRO) and on Friday, Chevron (CVX).

The earnings parade kicks off on Monday with Verizon Communications (VZ) and Kelloggs (K). Procter & Gamble (PG) gives numbers and guidance on Tuesday, as do Colgate-Palmolive (CL),  Qwest Communications (Q), Liz Claiborne Inc. (LIZ), Office Depot (ODP), and Alcatel-Lucent (ALU).

Kraft Foods (KFT) is Wednesday, as is  Prudential Financial Inc. (PRU). Sprint Nextel (S) report profits on Thursday, along with  Electronic Data Systems Corp. (EDS).

On Friday, Warren Buffett's Berkshire Hathaway reports. Also on Friday we hear from Cigna Corp. (CI) , International Paper Co. (IP) and Viacom Inc. (VIA).

Where to begin this week? The Fed? Housing? Technology? Earnings? No worries, mate, we got your back. Its Linkfest!:

INVESTING & TRADING

U.S. stocks turn to Fed for direction next week: After a week of gains led by technology earnings, the market will have its focus firmly back on the ailing U.S. economy next week, this time with strong hopes that the Federal Reserve will again cut interest rates on Wednesday.  (Marketwatch)

Why is Crude Oil at $92?

Some Bulls See Hope in Buybacks: NO matter what else theybuy and sell, companies trade their own stocks from time to time, hoping to buy low and sell high, as the old adage advises. Net equity issuance -- the amount of stock sold by companies minus the amount bought --€” is tracked by Wall Street strategists because of its strong correlation with stock market moves. High issuance often heralds falling share prices; low figures tend to precede periods of market strength.  (New York Times)

Microsoft Planning to Buy 100 Companies Over Next 5 Years

Earnings Reports Improving: So far, 37% of the S&P 500 firms have reported (185 companies). The results have been better than most have feared, and over the past few days the results have been getting better. The median year-over-year growth rate has climbed sharply. We are now back in double digits, which if maintained would make this the 21st straight quarter of double-digit growth. Just last week, the median growth rate stood at 7.14%, the surprise ratio at 2.1:1 and a median surprise of 2.90%. (Zachs) (NOTE: Thompson measures earnings differently, and has S&P500 earnings growth at -1%).

How has the Hindenburg Omen performed? I've never been a big fan, but someone else crunched the numbers . . .

Why Kerkorian thinks jumping into the Oil industry is a safe bet: Nearly a year after ending his $1.6 billion assault on the management of General Motors Corp., 90-year-old corporate raider Kirk Kerkorian told Wall Street on Friday where he's parking the money: Oil. It's hardly surprising that the oil industry, with crude at an all-time-high of $92 a barrel, is luring capital away from less lucrative sectors of the market. What's unusual about Kerkorian's announcement is that he is not unleashing his wealth to unlock value bottled up in a clueless company. Rather, Kerkorian is pumping money into a company that his own press release claims embodies the attractive fundamentals of the petroleum refining industry (Marketwatch).

• Compare and contrast:

-Microsoft's Earnings Are Just Another Excuse to Sell a Rally (Real Money)

-Microsoft Looks Mighty (TheStreet.com)   

Is Warren Buffett Riding With Kia?  Warren Buffett came to South Korea -- home to one of his best-performing investments at the moment -- and launched a guessing game among the country's day traders. During a visit Thursday to the manufacturing city of Daegu, Mr. Buffett repeated his view that the South Korean stock market is undervalued compared with others. But he took a step further by citing examples of investments that he or his firm, Berkshire Hathaway Inc., had made in the country in recent years, including Kia Motors Corp. and steelmakers Posco and INI, now called Hyundai Steel Co. (Wall Street Journal)   

• Video: How to be a contrarian



 

ECONOMY & THE FEDERAL RESERVE

2/3rds Americans Say Recession is Likely: When looking a recession forecasts, you need to note two things: Economists, as a group, have never correctly predicted a recession; On the other hand, the public, as a group, has predicted 9 of the past 4 recessions . . . Many of the the tax policy and capital gains/dividend issues polled are also relevant to investors. 

Wall Street Wants 50, Fed May Give Zip for Now: Some Wall Street analysts are claiming financial markets have taken such a turn for the worse that Federal Reserve officials should cut interest rates by a half-percentage point next week.That's not going to happen, nor should it. A quarter-point cut is a closer call, though some officials don't think it's needed at this point.  (Bloomberg)

Inflation ex-inflation to be Official Fed Policy?: At least, according to voting Fed Governor Frederic Mishkin, who tells Bloomberg that Inflation Minus Food, Energy Is a `Better Guide'.

How Fed Officials Might Perceive Interest-Rate Options:   When the Federal Reserve meets Tuesday and Wednesday, it faces another tough choice on interest rates. Standing pat retains some appeal, given the aggressive rate cut just last month. But markets put high odds on a quarter-percentage-point rate reduction, given a string of downbeat economic and profit reports, and see a small possibility of half a point.  How will Fed officials assess these options? (Wall Street Journal)

No Free Lunch: Ongoing Ramifications of an Easy Fed

Rangel Proposes Cuts in Tax Overhaul:  Tax Blueprint Mixes Pain, Gains    Rangel ProposalIs Seen as Shaping Long-Term Debate (free Wall Street Journal); see also A Tax Plan as Trial Run for ’09 Law:   (NYT)

• WTF? Are handbags really  that expensive? Get a handle on handbag rental websites


HOUSING

Can Housing Be "Rescued?" The problem in the housing market is really, quite simple: Over the past 5 years, 100s of 1,000s people -- perhaps a million buyers or more -- were creatively financed into homes that THEY CANNOT AFFORD. Combine this with a still over-priced homes, and the ongoing inventory build, and that's a recipe for a prolonged, multi-year slump in Housing.  This may not be what people want to hear, but it is unfortunately true: Forget the 2/28 ARMS, the teaser rates, the Interest only loans -- if we were to magically reset every one of those problem mortgages at a 6.25% fixed rate 30 year mortgage, it would not "fix" the housing problem. A huge swath of them, perhaps a majority, would eventually default anyway. 

For sale: 2 million empty homes (CNN)   

Realtors keep bright outlook despite cloudy data: Although six months have passed since the cheery chief economist of the nation's top realty trade association resigned, the trade group still holds an uncommonly bright view of the battered homes market. (Reuters)

Homeowners aren't without options when faced with foreclosure: Foreclosures are on the rise. The Center for Responsible Lending predicts that there will be 2.2 million foreclosures in the coming years. According to The New York Times, the Joint Economic Committee of Congress soon will issue a study predicting 2 million foreclosures by the end of 2008.Whether an impending foreclosure can be blamed on job loss or an interest rate increase or something else, there are steps to take to reduce the severity of the problem      (BANKRATE.COM)

As Housing in Florida Plummets, the Top Tier of the Market Just Dips: Despite a record number of foreclosures and a raft of public auctions of unwanted houses, the upper tier of the real estate market in Florida remains relatively immune to the spreading disaster. Houses and condominiums with price tags of $1 million or more are still changing hands robustly in some of the most exclusive areas, though at a pace less brisk than a year ago. The glistening waterfront glass towers on Miami Beach, the sprawling estates set in manicured gardens in Palm Beach and the clustered mansions in Naples are attracting buyers, both domestic and foreign. As in other once-booming regions, in Florida the housing market seems to be not one market, but two. (New York Times)

When Will the Housing Market Finally Hit the Bottom? The housing market is just getting worse. Home resales tumbled 8% in September to the lowest levels in this decade, prompting the obvious question: When will it all end? The honest answer is no one knows. Optimists have been saying for more than a year that the worst is behind us, while the pessimists have been saying recovery is still a year, or years, away. So far, the pessimists have been right about the weakness in the housing market, but their forecast that the collapse in housing would lead to a general economic malaise has, at least so far, failed to pan out. The economy has slowed, but has not fallen into recession, as consumers and investors adjust to a world in which home prices don't automatically rise 5% or 10% a year. (Real Estate Journal)



TECHNOLOGY & SCIENCE

Facebook employees know what profiles you look at: Valleywag notes a "friend got a call from her friend at Facebook, asking why she kept looking at his profile," says a privacy-conscious source at a major tech company. Turns out Facebook employees can (and do) check out anyone's profile. Not only that, but they also see which profiles a user has viewed -- a major privacy violation. If you've been obsessed with a workmate or classmate, Facebook employees know. If Barack Obama's intern has been using the campaign account to troll for hotties, Facebook employees know. Within the company, it's considered a job perk, and employees check this data for fun.

Blogs: The Next Takeover Target?  (BW)

The Trouble with Men: Deadbeat granddads, life-shortening sons and genetically bullying brothers these are just a few effects revealed in biologist Virpi Lummaa's studies of how evolutionary forces shape later generations      

• Forbes has a special feature on The Future:

-The Future Isn't What It Used To Be by Quentin Hardy
We've never had it better than today, or felt worse about tomorrow.

-Crowdsourcing The Crystal Ball by James Surowiecki
Experts are terrible at forecasting the future, but crowds of amateurs turn out to be pretty good.

-You Can't Predict Who Will Change The World by Nassim Nicholas Taleb
Random tinkering is the path to innovation. We need more of it.

-The Futurists by Elisabeth Eaves
Snake oil salesmen, geopolitical visionaries or just overpriced corporate consultants?

and lots more here . . .

• Tired of online spam, scams, and flim-flams? Check out the FTC Consumer Information

Five Fixes for Apple'€™s iTunes Video Woes   




MUSIC BOOKS MOVIES TV FUN!

• And just in time for the holidays: Pixar 1st Short Film Collection gets released Nov 6th

Colbert vs. Stewart: Has the student surpassed the master? 

Fun interview with Mindy Kaling (Kelly Kapoor) from The Office    

Before the Devil Knows You're Dead is garnering very strong reviews. (Metacritic)

That's all from a very rainy weekend here in the NorthEast, where we have been perusing a short list of charities you can make donations to in Southern California post wildfires. 

~~~

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, October 28, 2007 | 06:30 PM | Permalink | Comments (12) | TrackBack (0)
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And Another One Bites The Dust:


MERRILL LYNCH CEO TO RESIGN

(AP) -- Stan O'Neal, the beleaguered chief executive of Merrill Lynch & Co., was reportedly close to resigning Sunday amid broad criticism for leading the world's largest brokerage to its biggest quarterly loss since it was founded 93 years ago.

In a week that included an $7.9 billion write-down related to subprime mortgages and O'Neal's unauthorized overture to sell the company to retail bank Wachovia Corp., the board of Merrill Lynch reached a broad consensus Friday for his dismissal, according to several media reports. He would become the highest-ranking casualty of the global credit crisis that swept through Wall Street's biggest investment banks during the third quarter.
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Posted by: VJ | Oct 28, 2007 7:54:49 PM

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