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Amy Winehouse

Monday, April 30, 2007 | 05:30 PM

Yet another talented UK vocalist taking her cues from the past, but with a modern twist: Amy Winehouse. Winehouse's 2nd album, Back to Black, freshens up the classic soul albums with original songs done in the style of the 1950/60's girl groups.

New Yorker Magazine got it just right -- "a fierce English performer whose voice combines the smoky depths of a jazz chanteuse with the heated passion of a soul singer." I hate when people compare a new performer with the greats, but you can say that stylistically, she falls between Billie Holiday and Ronnie Spector.

This is the fourth musician we've spotlighted, who have gone retro -- delving into an older genre and freshening it up (Bitter:Sweet, James Hunter and Joss Stone were the first three). Except for Bitter:Sweet, they all seem to hail from England.

There's a good interview here and 4 videos of acoustic versions of her songs after the jump (I cannot link to AOL's DL as its a terribly annoying site)

~~~

Continue reading "Amy Winehouse"

CNBC Discussion On Grantham's Bubble Thesis

Monday, April 30, 2007 | 01:26 PM

in Investing | Markets | Media | Psychology/Sentiment

As per our earlier discussion, here is the CNBC conversation on Grantham's bubble issue.

Click for video

CNBC Appearance: Bubbles Everywhere ?!

Monday, April 30, 2007 | 09:57 AM

in Economy | Investing | Markets | Media | Psychology/Sentiment

As we mentioned this weekend, I will be on CNBC this morning at 11:03 am discussing a bubblicious concept -- that the entire world is now bubble -- a situation likely to eventually get out of hand.

That is the view of Jeremy Grantham in his quarterly letter to investors as GMO’s Chairman of the Board. He oversees quantitative products and is director of investment strategies. In Grantham's 1Q 2007 letter to clients, he discusses how market bubbles form, why it's so difficult to pinpoint when a bubble will burst, and looks at potential catalysts for that event.

To give you a sense of GMO, they run $141 billion for mostly insitutional clients (and U.S. VP Dick Cheney). In their Equity portfolio of $125 billion, $93 billion of it is non-U.S. holdings. Grantham developed sometihng of a reputation as a bear -- despite running a mostly long-only portfolio.

Why does anyone care what Grantham thinks? In additon to outperforming most of his peers, his qaurterly letter reveal him to be a smart quantitative investor, who relies on the simple mathematical concept of mean reversion. Based on that thesis, in June 2000, he noted in a Forbes debate with Henry Blodget that markets were still way over-valued:

"We basically believe that, from their highs, the S&P 500 will decline 50%; the Nasdaq, 70%; and the nonearnings Nasdaq, 80%. The safest thing to say is sooner or later. The great bear markets do not hurry. They have often had precipitous decline phases. But basically the 1929 peak didn't really bottom until 1945. The 1972 peak didn't bottom until 1982. And, incidentally, in those ten years, the S&P was down close to 40% in real terms." (emphasis added)

That call turned to spot on (I have the the full text, but if anyone has a link, it would be appreciated).

For those of you who did not follow up the reference in the linkfest, here's a quick overview:

1. Global fundamental economic conditions are nearly perfect and have been for some time.

2. Availability of global credit is generous and cheap and has been for some time.

3. Animal spirits and optimism are therefore high and feed on themselves through reinforcing results and through being universally shared.

4. All global assets reflect this and are overpriced and show, probably for the first time, a negative return to risk taking.

5. The correlation in global economic fundamentals is at a new high, reflected in the steadily increasing correlation in asset price movements.

6. Global credit is more extended and more complicated than ever before so that no one is sure where all the increased risk has ended up.

7. Every bubble has always burst.

8. The bursting of the bubble will be across all countries and all assets, with the probable exception of high grade bonds. Risk premiums in particular will widen.

9. Naturally the Fed and Fed equivalents overseas will move to contain the economic damage as the Fed did last time after the 2000 break. But the heart of thelast bubble, the NASDAQ and internet stocks, still declined by almost 80% and 90%, respectively.

10. What is wrong with this logic? Something I hope.

11. Of course the tricky bit, as always, is timing. Most bubbles, like internet stocks and Japanese land, go through an exponential phase before breaking, usually short in time but dramatic in extent. My colleagues suggest that this global bubble has not yet had this phase and perhaps they are right.

The bottom line remains that U.S. stocks are hardly the bargain they are made out to be; Rather, trading them has become a combination of liquidity driven momentum based investing.

Week in Preview

Monday, April 30, 2007 | 07:08 AM

in Earnings | Economy | Employment | Markets

This week will be about Earnings and Payrolls. Following that fugly GDP number, Friday's NFP is taking on greater importance -- especially the wage inflation aspect. Consensus is for 120k new jobs (it takes 150k to keep up with population growth). The biggest drag on job growth has been construction and manufacturing.

Other economic data this week:

Monday: personal income and spending
Tuesday: vehicle sales (consensus is down 3%) and Institute for Supply Management
Wednesday: March factory orders
Thursday: Q1 productivity, and ISM service-sector activity
Friday: NFP

Monday, Verizon reports
Tuesday is P&G and Archer Daniels Midland;
Wednesday Time Warner
Thursday GM, Starbucks and CBS
Friday: Eastman Kodak (there's speculation EK is a private-equity target).

We get ALOT of speeches this week also: Chairman Ben Bernanke, Treaury Secretary Hank Paulson, St Louis Fed President William Poole, New York Fed President Timothy Geithner, Kansas City Fed President Thomas Hoenig -- anyone of these gentleman can move the markets, so keep an ear out.

End of April Linkest (Part II)

Sunday, April 29, 2007 | 06:30 PM

in Weblogs

Yesterday, we looked at the week that was. Today's linkage will also look at what is upcoming this week.

This week will be about Earnings and Payrolls. Following that fugly GDP number, Friday's NFP is taking on greater importace -- especially the wage inflation aspect. Consensus is for 120k new jobs (it takes 150k to keep up with population growth). The biggest drag on job growth has been construction and manufacturing.

Other economic data this week:

Monday: personal income and spending
Tuesday: vehicle sales (consensus is down 3%) and Institute for Supply Management
Wednesday: March factory orders
Thursday: Q1 productivity, and ISM service-sector activity
Friday: NFP

There are still a slew of earnings coming in, and while the profits have been coming below last quarter's numbers, they are still way above the lowered 3-4% analysts consensus: Year-over-year, we're running about 7% so far. On Monday, Verizon reports; Tuesday is P&G and Archer Daniels Midland; Time Warner reports Wednesday. GM, Starbucks and CBS all report Thursday, and Eastman Kodak finishes the week with results on Friday (there's speculation EK is a private-equity target). We get ALOT of speeches this week also: Chairman Ben Bernanke, Treaury Secretary Hank Paulson, St Louis Fed President William Poole, New York Fed President Timothy Geithner, Kansas City Fed President Thomas Hoenig -- anyone of these gentleman can move the markets, so keep an ear out.

With the Dow up 19 of the past 21 days, a pullback is overdue -- but the timing is anyone's guess.

Onto the Sunday clicking!

INVESTING & TRADING

• Two views on the market:

-Top market timers staying strong on stocks (Marketwatch)

-Technically Speaking, This Bull Needs a Break: (Barron's)

• Jeremy Grantham: All the World's a Bubble : TheStreet.com gave some coverage this week to Grantham's cautions. "He has upped his concerns in his latest letter to shareholders. Grantham says we are now seeing the first worldwide bubble in history covering all asset classes. Everything is in bubble territory, he says. Everything." Grantham has studiously avoided television his long career, and on Monday morning, I will be discussing his views on CNBC.

• Mark Hulbert gives some pretty straight forward advice: Do Your Homework (or Buy an Index Fund) (New York Times)

• Michael Steinhardt laments the state of the investment industry [He] launched his hedge-fund firm 40 years ago and quickly became an industry giant, doesn't think much of some of the people making huge fortunes in the business today. Back when he started, he says, hedge-fund chiefs were members of "a very limited, elite group that had mystery and excitement and élan. Now, it's all about making money for the managers." (Barron's)

• Has Amazon.com fixed its profitability problem? The shares of the online retailer had a boffo week, gaining 40% in two days (Marketwatch)

• Boom Time: Russia's Abundant Oil and Gas Reserves Are Powering up the Economy

• The South Korean miracle: Which developed country's stock market currently trades at a 10.7 price-to-earnings ratio, despite sporting a 4.3% inflation-adjusted growth rate for its gross domestic product? (Marketwatch)

• Dollar Touches a New Low Against Euro

• China Tells Banks to Set Aside More Money as Reserves: China ordered banks to set aside more money as reserves for the seventh time in 11 months to try to prevent the world's fastest-growing major economy from overheating. Lenders must put aside 11 percent of deposits starting May 15, up from 10.5 percent, the central bank said on its Web site. (Bloomberg)

ECONOMY

The Wall of worry continues to build:

• I asked readers what sectors of the economy are being impacted by the housing slowdown, and you folks came up with quite a list: Housing Slowdown Sector Impact. Fascinating stuff.

• The U.S. Economy: Prospects and a Puzzle Revisited: SF Fed President Janet Yellen made a speech recently, and made the most explicit acknowledgement of the economic deceleration and its potential impact of any Fed member; I guess the business cycle hasn't been repealed. (San Francicso Federal Reserve)

• GDP Data Release (and primer) Want to know how GDP is assembled? A quick primer

• Fitting Growth Data Into the Unemployment Puzzle: With the economy growing so slowly, why is unemployment falling? Explanations range from measurement problems to the peculiar behavior of construction jobs to the possibility that productivity growth is easing. (free WSJ) See also Output and jobs pose statistical mismatch (FT)


HOUSING

• U.S. House Prices Slide As Property Glut Grows: Tighter credit and a growing glut of properties are depressing an already weak U.S. housing market, wrecking the industry's hopes for an early rebound. That leaves buyers in a strong position to negotiate for bargains during the spring home-shopping season, the busiest time of the year for housing sales. (Real Estate Journal)

• US new home market may take til 2009 to rebound Recovery of the U.S. market for new homes could take another year if trouble in the adjustable-rate subprime mortgage market spreads to other types of residential lending, credit-rating agency Standard & Poor's said on Monday (Reuters)

• 'Liar Loans' Fuel Bust With $1 Billion Fraud: Cheating on mortgage applications is so widespread and so seldom punished that it's fueling an increase in foreclosures that will prolong the housing slump, said Robert W. Russell, counsel to the director of the Office of Thrift Supervision, which oversees savings and loans. (Bloomberg)

POLITICS/TAXES

• Homeowners Wage a Tax Rebellion: "Falling home prices and rising property-tax assessments are fueling a grass-roots tax rebellion . . . Tax assessments didn't keep pace with soaring property values in recent years. Now, assessments are catching up at the worst possible time, just as property prices soften (free Wall Street Journal)

• Congress Wrangles Over Bush's Expiring Tax Cuts: A surprisingly blunt assessment from Bloomberg's John Berry: "Republicans have only themselves to blame, because the expiration dates were set originally to mislead the public about the amount of revenue loss involved. Of course, from the beginning the plan was to argue that letting the cuts expire would impose tax increases that would harm the economy and cost jobs..."

TECHNOLOGY & SCIENCE

• Dell’s Founder Is Rethinking Direct Sales: Michael S. Dell, the chairman and chief executive of Dell, who built his business by selling direct to his customers, is now thinking about changing the way the company markets its computers. “The direct model has been a revolution, but it is not a religion,” Mr. Dell wrote in a memorandum sent on Wednesday to 80,000 Dell employees. (New York Times)

• Experts may have found what's bugging the bees -- a Fungus gets the blame

• Vista, Office '07 drive up Microsoft's Q3 revenues: The above numbers reflected a previous deferral of $1.67 billion of revenue and operating income, $1.14 billion of net income and $0.12 of diluted earnings per share, primarily related to the technology guarantee programs for Windows Vista and the 2007 Microsoft Office release. Excluding those deferrals would bring revenue growth down to 17 percent . . ."

• Quantum physics says goodbye to reality: For the Physics heads out there, consider this quantum concept: Recent experimentation seem to support the idea that "reality" does not exist when we are not observing it.

• Lawmakers propose reversal of Net radio fee increases "You can't put an economic chokehold on this emerging force of democracy," Inslee said in a statement e-mailed by a spokeswoman. "There has to be a business model that allows creative Webcasters to thrive and the existing rule removes all the oxygen from this space." (C/Net News.com)

MUSIC BOOKS MOVIES TV FUN!

• Weekend Jazz: Dexter Gordon

• Can Music Survive Inside the Big Box?: In past decades, deejays and music critics helped shape musical trends. Today, many music industry executives agree, the big boxes have become the new tastemakers. Even as compact disc sales fall, their choices dictate which CDs are widely available on store shelves across the U.S. Big boxes are the industry's biggest distribution channel -- and the rock, hip-hop, jazz and classical music titles they choose not to carry face drastically reduced chances of reaching mass audiences. (free Wall Street Journal)

• Ex-C.I.A. Chief, in Book, Assails Cheney on Iraq: George J. Tenet, the former director of central intelligence, has lashed out against Vice President Dick Cheney and other Bush administration officials in a new book, saying they pushed the country to war in Iraq without ever conducting a “serious debate” about whether Saddam Hussein posed an imminent threat to the United States. (New York Times)

• How the CIA Used a Fake Sci-Fi Flick to Rescue Americans from Tehran (Wired)

• And what has to be my favorite headline of the week: Why can't gay dwarves get married in Middle-earth?

That's your weekend twofer. Let us know if you prefer this format to one longer fest, by sending an email here, and if I can pick out your responses from amongst the spam, we'll see if we can implement your wishes.

Enjoy what's left of your weekend -- its Sopranos and Entourage night!

End of April Linkest (Part I)

Saturday, April 28, 2007 | 07:30 PM

in Weblogs

Four straight weeks of up! The Dow notched several records, advancing 19 of the past 21 sessions -- one of the strongest streaks seen since 1929. The Industrials and the Nasdaq each gained 1.2% for the week, while the S&P500 tacked on 0.7%. The Russell 2000 continues to lag, barely notching into the green this week. Depending upon Mondays close, monthly gains for April may be the for the major indices in 5 years.

There is some speculative juices running: The Semis grabbed ~9% in two weeks, while Amazon tacked on 40% -- in two days!

Barron's Trader column notes that "institutional market confidence stands at the highest level since 1990, according to a Yale School of Management survey that asked respondents to gauge the odds of a market crash in the next six months. Meanwhile, the gap between institutional and individual confidence has widened to a historic chasm. This is "the polar opposite of what prevailed late in the tech-bubble years," notes Douglas Ramsey of the Leuthold Group."

Each week, I try to make the fest a balance: depth versus brevity, eclectic topics versus relevance. This week is an experimental 2 parter: Today, we will go over the week that was, and tomorrow, we will look at the upcoming week that will be. If y'all like this, we may make it a regular feature.

Let's get clicking!

INVESTING & TRADING

Some looks at the record setting Dow this week;

• Finding the Meaning in Dow 13,000: The stock market reached record highs this past week even as the government reported that economic growth slowed to its weakest pace in four years. Better-than-expected corporate earnings sent the Dow Jones Industrial Average past the 13000 mark for the first time on Wednesday. And reports that corporate earnings will improve as the year continues contributed to easing concerns about a slowdown that emerged when stock markets plunged in late February. (free Wall Street Journal)

• Bulls snorting over stocks, but not yet stampeding (Marketwatch)

• The Dow May Be at Its High, but Its Performance Is Still Lacking: Does that mean the stocks in the Dow have done better than those in the S.& P. index since the market peaked in 2000? Actually not. As can be seen in the accompanying charts, only half of the stocks in the Dow are higher than they were back then, while the number of rising stocks in the S.& P. is triple the number of losers. (New York Times)

• One of the most talked about stories this week was the New York Times piece on the compensation for some top performing hedgies: Top Hedge Fund Managers Earn Over $240 Million

• Citigroup: Time Break Up GE: General Electric Co. shares staged their biggest rally in more than four months after Citigroup Inc. analysts said the company should spin off NBC Universal, GE Money and the real-estate division. "GE's size and complexity is working against investor interest in the stock and has contributed to further valuation erosion,'' the analysts wrote. (Bloomberg)

• The Real-Estate Blame Game: The unlikeliest victims of the housing slump.

• Five Reasons to Think the Pound Will Get Stronger: You need to be at least 40 to remember when the pound regularly traded at more than $2. It broke through that point last week for the first time since the U.K. was thrown out of the European exchange-rate mechanism in 1992. Most people view a $2 pound as a historical aberration and assume it is about to slide again, just as it has in the past. Think again. The British currency may go even higher -- perhaps to $2.50. (Bloomberg)

• DeCoupling US and Global Markets?

• World passes by: Toyota has overtaken General Motors as the world's largest automaker, selling the most cars in the first quarter. This news is significant because it exemplifies the waning role of the U.S. in the world as globalization takes hold. And it further highlights the long-term payoff of an ethically driven company (Marketwatch)

ECONOMY

The Wall of worry continues to build:

• U.S. Economic Growth Is Slowest In 4 Years Amid Housing Slump
(if no WSJ, go to GDP = 1.3%)

• Psst: Want to buy a better credit history?: Companies are selling or renting access to improved credit by adding low-scoring borrowers as authorized users of credit cards belonging to those with stellar credit. (Star Tribune)

• Consumers continue to support growth: Consumers continued to spend as durable goods purchases rose 7.3 percent leading to an overall increase of 3.8 percent in personal consumption expenditures. Consumption contributed 2.66 percent to overall GDP whereas private investment took away 1.06 percent, primarily a result of the housing slowdown.

HOUSING

• Home Equity Stalls: After years of piling debt on their homes, Americans are becoming more cautious about using them as a piggy bank. A cooling housing market and higher interest rates have made homeowners more reluctant to tap the equity they may have built up in their residences. The amount borrowers owe on their home-equity lines of credit has slipped in the past six months, to $561 billion at the end of March, the first such decline since 1999, according to new data from Equifax Inc. and Moody's Economy.com Inc. (free Wall Street Journal)

• More on Mortgage Equity Withdrawals and Consumer Spending

• Subprime assault on southern California: Far away from the sun-kissed beaches and palm trees that make up southern California’s idyllic coastline, trouble is brewing in the Inland Empire (FT)

TECHNOLOGY & SCIENCE

• Dell’s Founder Is Rethinking Direct Sales: Michael S. Dell, the chairman and chief executive of Dell, who built his business by selling direct to his customers, is now thinking about changing the way the company markets its computers. “The direct model has been a revolution, but it is not a religion,” Mr. Dell wrote in a memorandum sent on Wednesday to 80,000 Dell employees. (New York Times)

• Experts may have found what's bugging the bees -- a Fungus gets the blame

• Vista, Office '07 drive up Microsoft's Q3 revenues: The above numbers reflected a previous deferral of $1.67 billion of revenue and operating income, $1.14 billion of net income and $0.12 of diluted earnings per share, primarily related to the technology guarantee programs for Windows Vista and the 2007 Microsoft Office release. Excluding those deferrals would bring revenue growth down to 17 percent . . ."

• Quantum physics says goodbye to reality: For the Physics heads out there, consider this quantum concept: Recent experimentation seem to support the idea that "reality" does not exist when we are not observing it.

• Lawmakers propose reversal of Net radio fee increases "You can't put an economic chokehold on this emerging force of democracy," Inslee said in a statement e-mailed by a spokeswoman. "There has to be a business model that allows creative Webcasters to thrive and the existing rule removes all the oxygen from this space." (C/Net News.com)

MUSIC BOOKS MOVIES TV FUN!

• Weekend Jazz: Dexter Gordon

• Can Music Survive Inside the Big Box?: In past decades, deejays and music critics helped shape musical trends. Today, many music industry executives agree, the big boxes have become the new tastemakers. Even as compact disc sales fall, their choices dictate which CDs are widely available on store shelves across the U.S. Big boxes are the industry's biggest distribution channel -- and the rock, hip-hop, jazz and classical music titles they choose not to carry face drastically reduced chances of reaching mass audiences. (free Wall Street Journal)

• Ex-C.I.A. Chief, in Book, Assails Cheney on Iraq: George J. Tenet, the former director of central intelligence, has lashed out against Vice President Dick Cheney and other Bush administration officials in a new book, saying they pushed the country to war in Iraq without ever conducting a “serious debate” about whether Saddam Hussein posed an imminent threat to the United States. (New York Times)

• How the CIA Used a Fake Sci-Fi Flick to Rescue Americans from Tehran (Wired)

• And what has to be my favorite headline of the week: Why can't gay dwarves get married in Middle-earth?

That's part I -- tomorrow, we look at the coming week, including a rounduup of the Sunday papers. You stay classy, San Diego!

Which is Performing Better, the Dow or the S&P500 ?

Saturday, April 28, 2007 | 10:45 AM

in Data Analysis | Index/ETFs | Investing | Markets

The short answer is, depends on how you calculate it.

The results of looking at these two indices from various angles may surprise you.

The Dow is at an all time high, the S&P500 a few percent below. But it turns out that, as a whole the SPX is doing much better than the Dow.

The New York Times' Floyd Norris gives us the details:

"The Dow is normally calculated as a price-weighted index, meaning that stocks with the highest price for a share get the heaviest weighting. That is largely a historical accident, as it was the easiest way to do it in the 19th century, when the best calculator available was a person with a pencil.

The most common method of calculating indexes is by market capitalization, in which the companies with the largest market value count for the most. The chart [below] shows how the Dow would look if it were calculated in that manner, instead of the other.

While the Dow is up 18 percent from March 24, 2000, when the S.& P. peaked, it would have been down 8 percent had market capitalizations been used in the computation. That reflects the fact that some of the Dow stocks that did the worst, including General Electric, Microsoft, Intel and Pfizer, are large capitalization stocks that had relatively low share prices. That meant they had little impact on the Dow as normally calculated, but a large effect on the Dow as computed using capitalization figures."

What about equal weight computation? Hasn't that ETF (RSP) out performed the standard S&P500? Glad you asked -- yes, yes it has:

"The third method often used in index calculations is one of equal weighting, which assumes that one puts the same dollar value into each stock in the index.

The chart [below] shows that the S.& P. 500, calculated by market capitalization, is still 2 percent below where it was on March 24, 2000. But that reflects poor performances by some of the same very large companies that starred before 2000 and have not done as well since. Calculated by equal-weighting, the S.& P. 500 is 82 percent higher than it was in 2000."

The following charts show Dow and S&P500 performance since March 24 2000 (the day the S&P500 peaked):
>
click or much larger graphic

Graphic courtesy of NYTimes;
Sources: S&P, Bloomberg

>
>

It would be interesting to see a price-weighted version of the SPX, or a an equal-weighted version of the Dow.

Norris adds that by the market capitalization version makes clear that "the Dow has underperformed, even if it is the Dow that is the index setting records these days."

Of course, all of these measures are domestic. Measured in euros, the price-weighted Dow is 15% lower than its 2000 peak . . .

Source:
The Dow May Be at Its High, but Its Performance Is Still Lacking
FLOYD NORRIS
NYT, April 28, 2007
http://www.nytimes.com/2007/04/28/business/28charts.html

Friday Night Jazz: Dexter Gordon

Friday, April 27, 2007 | 06:30 PM

in Digital Media | Friday Night Jazz | Music

FNJ has a guest DJ tonite: BondDaddy is in the house!

Dexter Gordon is one of the greatest tenor sax players. He had a strong tone and incredible sense of melody. Some players like Sonny Rollins and Joe Henderson had a slippery sense of time; their phrases speed up and slow down, moving within the rythm section's accompaniment. Not Dexter. Dex's time was rock solid, never wavering. The rythm section had to accompany his time.

His playing is incredibly melodic, easily followed by the listener. Ideas naturally morphed from one to the other, always following a logical pattern. However, he was also able to surprise listeners with a run into upper chordal extensions.

His playing provides a logical link between Parker and Coltrane. Dex used many ideas from Parker, but played them with a tone that was deep, bold and soulful. His tone provides the link to Coltrane, who also favored a deep and rich tenor tone.

Gordon swung -- and swung hard. If your feet are not tapping within 8 bars of his starting to play, you're just not listening.

Homecoming: Live at the Village Vanguard. Dex lived in Amsterdam for about 10 years, and this was the album be made when he came back. Very cool set. Woody Shaw is on Trumpet, and the two work really well together. THis is Dexter at the very top of his game (and probably one of the top 25 live jazz albums of all time).

He also starred in the Round Midnight, probably the best jazz movie ever made

Our Man in Paris: This be-bop session is a meeting between three of the most influential musicians of the forties. The rhythms crackle, the solos fly; Our Man In Paris is essential Dexter. A nice compilation of standards.

Go: Its been widely reported Gordon himself considered this his greatest achievement. Brimming with conviction and poise, Gordon's gentle-giant sax carries itself with a sort of graceful edge that is difficult to emulate. Never has anyone made the diminished scale sound so musical.

Ballads: This is a compilation of his ballads (duh), and he could play just beautifully on these. Gordon delivers his almost sleepy and smoke-filled solos with real grace. Some of the most romantic playing you will every hear.

~~~

Incidentally, there are tons of videos of Dexter posted; Here are a few:

I Guess I'll Hang My Tears Out To Dry

Loose Walk

More Than You Know

Thanks to Hale "Bond Dad" Stewart for tonite's FNJ

GDP = 1.3%

Friday, April 27, 2007 | 11:00 AM

in Data Analysis | Economy

By now, you know the GDP came in way below consensus. Given recent revision history, its very likely this will not be the final number.

The economy slowed to its weakest pace of gains in 4 years, when GDP was 1.2% during Q1 2003.

Housing gets most of the blame (duh), but do not ignore the accelerating inflation factor as a key element. Most traders realize the Fed is watching that component closely; Hence, why you are not hearing the usual "Rate Cut" chants from the cheap seats. PCE rose 3.4% (it decreased 1.0% Q4) Even the nonsensival core PCE (ex food and energy) was plus 2.2% (following 1.8% Q4).

International trade, Business Capex spending, Inventory growth, and decreased government spending all weighed on the economy to produce that 1.3% number.

The one bright spot: Durable goods. Plus 7.3% in Q1 follows +4.4% in Q4. Pretty much everything else was punk.

Nice table via the WSJ:

GDP components and their impact on growth.

GDP Component	Added (subtracted) from GDP (%)
Residential fixed investment	(0.97)
International trade	(0.52)
Inventories	(0.30)
Consumer spending	2.66
Business spending	0.21
Government spending	0.18
Source: WSJ, Commerce Department

Source:
U.S. Economic Growth Is Slowest In 4 Years Amid Housing Slump
JEFF BATER
WSJ, April 27, 2007 9:58
http://online.wsj.com/article/SB117767443639284710.html

GDP Data Release (and primer)

Friday, April 27, 2007 | 07:55 AM

in Data Analysis | Economy

"The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists."

-Joan Robinson, Cambridge University

Today's Q1 GDP release will be interesting, to say the least.

After the Q4 GDP revisions (which we forewarned about), I've gotten many emails asking how and what goes into GDP data. As you requested, here is a grossly oversimplified review on GDP data:

GDP is the sum total of the economic activity in the nation. It is comprised of Personal consumption, plus Gross domestic investment, plus Government consumption and investment, plus Net exports.

Putting that into a simple formula would look like this:

GDP = consumption + investment + Government spending* + (Exports − Imports)

There are 3 GDP releases: Advance, Preliminary, and Final. We get one at the end of each month. Because some of the data takes a while to assemble, the first two releases are often revised. Recall the initial 2006 Q4 release was 3.5%, which turned out to be off by almost 30% (final was 2.5%). The range of revisions is typically between 50 and 100 basis points. There's no grand conspiracy here, it merely takes a while to assemble various data, like capital spending, imports, exports, etc.

Once we have a GDP number, we can look at it two ways: Nominal and Real. Nominal GDP is the dollar value of output (see formula above), regardless of inflation. Real GDP takes into account how much of the increase in dollar output is attributable to price increases, versus output increases.

Okay, with that out of the way, lets look at how GDP and its components might shake out this morning. The WSJ's Justin Lahart notes:

"The Commerce Department reports first-quarter gross domestic product today and economists don't expect good news. They estimate the economy grew at a 1.8% annual rate, slower than the already tepid fourth-quarter rate of 2.5%. That would make it the fourth quarter in a row that GDP has grown at less than 3%. The last time that happened was during the jobless recovery of 2002.

The biggest drag on the economy continues to be housing, which subtracted more than a full percentage point from GDP growth in the previous two quarters. Business spending was lackluster, leaving it to American consumers to generate demand. That's worrisome, says Northern Trust economist Paul Kasriel, because consumer spending has weakened. Hardly noticed amid the stock-market rally, Target said last week that it expects its sales in April will be much lower than anticipated."

The big variable is if, and how much, consumer spending slowed. We know that Residential construction slowed significantly, equipment and software CapEx was flattish. Another wild card is inventory build, which has shown an ability to surprise the past few Qs. And given the weak and falling dollar, and the profit strength of multi-national companies, perhaps US exports improved somewhat (more exports + less imports = higher GDP).

Now for the market question: Do traders want to see higher GDP, implying greater profitability or weaker GDP, greasing the skids for a Fed Rate cut sooner rather than later? I have nary a clue as to which is more market friendly. We'll find out in half an hour . . .

~~~

* Note that some forms of government payments -- social security, medicaid, etc, are not included in GDP's formula.

Sources:
Heady Stocks Leave Economy On the Ground
JUSTIN LAHART
WSJ, April 27, 2007; Page C1
http://online.wsj.com/article/SB117763391886584237.html

News Release: Gross Domestic Product and Corporate Profits
BEA
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm