Linkfest Week-in-Preview (whackage edition)

Sunday, July 29, 2007 | 06:30 PM

Yesterday, we looked at the week that was (Yikes!). Today, we preview the upcoming week.

Markets will attempt to stabilize after last weeks shellacking. While we don't yet know if a bounce of a further whack is forthcoming, we do know that investors will be surfing choppier markets, as we have seen big increases in volume and volatility.

The coming week has plenty of other events to focus the minds of wary traders. This week sees plenty of economic releases. Starting Tuesday, we learn Same Chain Store Sales, the Employment Cost Index, Personal Income and Outlays, Construction Spending and Consumer Confidence. Wednesday has Mortgage Purchase Applications, Challenger Job-Cut Report, the increasingly interesting ADP Employment Report. Later in the morning, we hear ISM Mfg Index, Pending Home Sales Index, and the EIA Petroleum Status Report. The data flow keeps coming Thursday, when we hear the European and Bank of England Central Bankers' announcements. Also on the docket: the Monster Employment Index is released, as are Jobless Claims. Factory Orders and EIA Natural Gas Report are later in the morn. All that is a preview for Friday's big one: The Employment Situation report aka Non-Farm Payroll.

Epsbydate_2All told, a busy week of economic data flow -- and that is before we even get to the earnings releases. The peak of earnings season may have been last week, but there are still plenty of reports to come

Verizon (VZ) starts us off on Monday, along with ABN Amro and Tyson Foods (TSN). GM is on Tuesday, along with Coach (COH), Valero (VLO) and Whole Foods (WFMI). Wednesday is the biggest earnings day of the week, when we hear from Walt Disney (DIS), Time Warner (TWX), Kraft Foods (KFT), Electronic Arts (ERTS) and Starbucks (SBUX). Next up is Viacom (VIA), International Paper (IP) and NYSE Euronext (NYX) on Thursday. Procter & Gamble (PG) ends the week on Friday. A slew of REITs also report next week, including Simon Property (SPG) and General Growth Properties (GGP).

Its gonna be a busy week. We have all the links you need to get prepared:


And Now, the Good News: Large-Company Stocks May Rise: Investors wondering what to do after the past week's stock-market turbulence shouldn't be throwing in the towel. Fast-growing big companies could be poised to move higher in coming months. (Wall Street Journal)

Is the Bloom off Emerging Markets? Ten years ago this month, financial calamity of nearly unprecedented proportions in the post-war period crippled developing Asian economies, spread to emerging markets around the globe, derailed the U.S. economy temporarily and ended up toppling one of the highest-profile hedge funds of the time. The Asian flu, it was called. Now, emerging markets could catch a bad case of the American flu. (Barron's) if no Barron's sub, go here go here

• Our own James Altucher shakes off the bad news, and gives us Seven Reasons to Be Bullish Now: Private equity, Retail investing, Buybacks, Low-P/E oils and financials, Global economy boom, China, Tech upgrade cycle. My only question is how many of these were well known and already reflected in market prices prior to this week's action.  (

Honda, With Accord `Buzz,' May Win Investors as Toyota Stalls   Shares of Toyota Motor Corp. outperformed those of Honda Motor Co. in the first half of the year on rising U.S. sales. Now it may be Honda's turn. (Bloomberg) see also  The Way Forward Is Painful Forbes take on the US automakers.

The Residential Mortgage Backed Securitization Process  Cool info-graphic from Credit Suisse.

Going nuclear: It may surprise you to know that nuclear power has stayed with us all these years, stubbornly clinging to about a 20% share of U.S. electricity generation - about the same as natural gas but lagging far behind coal at 50%. (Globally, nukes have a 16% market share.) And while no new plants have come online since 1996 (construction began on that one in 1973), suddenly we're hearing lots of talk about a nuclear revival - or "renaissance," as the boosters call it. (Fortune)

Uh-OhWall Street Bonuses in Peril Normally, by late July bankers at JPMorgan, Citigroup and Bear Stearns are busy jockeying for morning tee times. But with their firms stuck holding billions of dollars in loans they had hoped to sell, hard-hitting investment bankers suddenly have a more pressing concern: Will I get my bonus this year?  (

note: this came out prior to the correction: Five Reasons to Sell, Sell, Sell No matter how wonderful things look, the good times won't last forever. Even as most market observers remain bullish, we asked them what could derail this bull market. Stocks could keep setting records for months or even years, but it pays for investors to know what dangers are lurking out there. This Five for the Money lists the five biggest threats to the stock market rally. (Business Week)

Stop and Think Before Using Stop Losses: Roger Nussbaum advises us to tailor each exit strategy to the specifics of each stock; a utility stock should have a different exit strategy from a biotech stock. ( See also Protect Your Backside.   

Is sourcing in China worth it? Suddenly, outsourcing to China-standard procedure for thousands of entrepreneurs-looks a lot more complicated. Now businesses must factor in the true cost of obtaining their products at the world-beating "China price." After the recalls, says Andrew Bartolini, an expert on global sourcing at Aberdeen Group, a research firm in Boston, "there's an understanding that low costs come with risks." (CNN Money)

Will the Leak Ruin the Engine? High-profile deals left hanging by this week's turmoil include the big buyout of Chrysler by Cerberus Capital Management, KKR's purchase of British retailer Alliance Boots and Citigroup's purchase of Allison Transmission. Barry Diller was forced to trim the stock buyback through which he hoped to take Expedia private. And there were reports that the sale of Cadbury Schweppes's drink business, which was being shopped around, will be delayed for months. (Washington Post)

D'Oh! Simpsons Campaign Uses a Backward Approach: Instead of having real products from 7-Eleven and other companies strategically dropped into the movie, the "Simpsons" team is putting its fictional brands -- from Krusty Burgers and KrustyO's cereal to Buzz Cola -- to work in the real world, as marketing partners like 7-Eleven, Burger King Holdings Inc., Jet Blue Airways Corp. and shoe maker Vans Inc. promote "The Simpsons Movie." (Wall Street Journal) See also 'Simpsons' Kwik-E-Mart Sales Double as Homer Simpson Meets 7-Eleven 

• Have a laugh on us: Just Another Day On Wall Street


The Wall of Worry adds a loft and a wraparound terrace:

The Sinking Dollar Also Has an Upside: The weak dollar is a source of humiliation, for a nation's self-esteem rests in part on the strength of its currency. It's also a potential economic problem, since a declining dollar makes the steady diet of imports on which Americans subsist more expensive and exerts upward pressure on interest rates. And yet there are substantial sectors of the vast U.S. economy—from giant companies like Coca-Cola to mom-and-pop restaurant operators in Miami—for which the weak dollar is most excellent news. (Slate)

A Big Shift for Retail? Big changes are coming to a department store near you. Whether the $27-billion buyout offer for department store king Macy's is consummated this summer or topped by a richer one later, the chain's days as a mega-national merchant are numbered, as are those of many of its competitors and many specialty stores, too.
For consumers, that will ultimately mean higher prices as scores of stores close and competition falls. (Kiplingers)   

Wealth Effect or Borrowing/Asset Sales Effect? Paul Kasriel of Northern Trust notes: "The wealth effect refers to the phenomenon that as household net worth increases, household spending relative to income increases. In other words, if the value of my stock portfolio rises today, I dine out at Applebee’s tonight rather than McDonald’s. Although the wealth effect might be appealing theoretically to academics, it does not stand up to logic if households are incurring outright deficits. If households are running deficits – i.e., they are spending more than their income – they either must be borrowing, and perhaps posting their wealth as collateral, or selling assets to non-household entities. MEW, of course, would fall into the borrowing category."  (PDF)   

• The usually circumspect Mark Zandi is getting nervous: Subprime could create global crisis, economist says With a "high level of angst" in the financial markets about who will take the losses from more than $1 trillion in risky mortgages, we could be just one hedge-fund collapse away from a global liquidity crisis, said the chief economist for Moody's A global meltdown is not likely, but the risks are growing, Zandi emphasized in a conference call with reporters following the release of a new study on subprime debt that concludes that the housing crisis could be deeper and last longer than investors now believe. (Marketwatch)   


Countrywide: "Home price depreciation at levels not seen since the Great Depression"  Quite the eye opening conference call   

Franco Is Still Dead, and Housing Is Still Bust: The latest round of housing statistics -- sales, starts, homebuilders' outlook surveys and earnings reports -- offered little hope that residential real estate would be back on its feet anytime soon.``Housing is bust, and wishful thinking cannot unbust it anytime soon,'' says Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. (Bloomberg)

"Unexpected Weakness in Home Sales?!?"

And now for some good news: Some Hard-Hit Cities See Signs Of a Housing Market Turnaround The latest trends offer some hope for an eventual recovery in a U.S. housing market that generally has been cooling since mid-2005. Even so, many economists and industry executives say that recovery will be very gradual and won't start before 2008 at the earliest. That's partly because more-stringent lending policies are keeping many potential buyers on the sidelines, while others are holding off in hopes of prices heading even lower. Meanwhile, there is still a glut of homes on the market in much of the country, especially in Florida and parts of Arizona, Nevada and California. (Real Estate Journal)   


• Two magazine cover stories caught my eye this past week:

- The riddle of Iran (The Economist) 
- How to Leave Iraq (Time)

George W. Bush is Handling His Job as President:  Polling data for the Bush and the G.O.P. gets worse and worse. Doug Kass is likely correct when he says a Democratic sweep may have significant market implications . . . If you have the option of taking one-time capital gains or special dividends anytime soon, I suggest you make sure they are paid prior to January 2009, to take advantage of the current 15% rate. I suspect that the rate will be less advantageous in 2009 . . .

Edwards, Trailing Rivals, Holds Sway Over Party's Agenda (free Wall Street Journal)



$300 TiVo HD Unboxed and Fondled (Verdict: Hell Yes!)

• Ever wonder what the offices of those really cool websites look like? Check out Office snap shots

Is Microsoft Still a Growth Company? The Street sure doesn't seem to think so. Goldman Sachs noted in a report last week that large-cap-growth mutual funds are dramatically underweight in the software giant's shares; the average fund holds a 1.23% position, compared with Microsoft's 3.3% weighting in the Russell 1000 growth index. Goldman software analyst Sarah Friar asserted that the low level of enthusiasm offers "potential for significant buying if growth managers fear missing the upside." (Barron's) See also Tech Stocks Check In


In a spin, the music business wants artists to give their all: Music Labels now want to "own" musicians, including publishing and live performance rights.   (FT)   
Staying Safe: The Complete Guide to Protecting Yourself, Your Family, and Your Business: From the former Mossad agent depicted in the film Munish, he had who warned the US of a use of airplanes against high profile buildings a month before 9/11. This common sense guide gives lots of advice as to how to protect your family in an age of terrorism.

The Impoverishment of American Culture There is an experiment I'd love to conduct. I'd like to survey a cross-section of Americans and ask them how many active NBA players, Major League Baseball players, and "American Idol" finalists they can name. Then I'd ask them how many living American poets, playwrights, painters, sculptors, architects, classical musicians, conductors and composers they can name. I'd even like to ask how many living American scientists or social thinkers they can name. (WSJ Op Ed)
• The iPod has become a target for theft. So how can you take your iPod out of your home without fear? Here's how to make your iPod theftproof

Whew! What a week. And I suspect the coming one will be no better. Get some rest, you'll need it.


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, July 29, 2007 | 06:30 PM | Permalink | Comments (5) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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What is the board's opinion on the Friday American Home Mortgage news? A 10pm news story saying it was canceling its dividends due to margin calls. Traded at 35 in early Feb. with an almost $2B market cap, now a former shell of itself. This was one of James Stewart's picks (who I view as pretty level headed). Is this an anomaly or a sign that things are worse than even BR suggests. Oh well at least the NAR says that the recovery is right around the bend...

Posted by: don | Jul 29, 2007 9:21:22 PM

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