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Happy New Year

Monday, December 31, 2007 | 11:59 PM

And to all a good night . . .

Can I Stay Up Late?

Monday, December 31, 2007 | 06:45 PM

in Real Estate

Performance of Commodity Sub-Groups

Monday, December 31, 2007 | 03:00 PM

in Commodities | Energy

Mike Panzner takes a look at the Commodity Research Bureau Index for 2007.

This year (2007), its is up 16.6%.

Given all the headlines about near-$100 oil, people might naturally assume the best-performer among the six sub-groups is energy.

That would be wrong.

In fact, the grains are the king of commodities during 2007. That sub-group, which includes wheat, corn, and soybean futures, has outpaced the CRB index by 34.61%, around twice that of the energy complex.

Performance of CRB Sub-Groups Relative to CRB Index (2007)

CRB          % Thru
Sub-Group    12/26/07
=============== ======
Grains             34.61
Energy             17.19
Precious Metals 6.33
Industrials          0.31
Livestock          -15.24
Softs                -18.52

5,000th Post!

Monday, December 31, 2007 | 12:03 PM

in Weblogs

How's this for an insane stat? The prior Existing Home Sales post was number 5,004.

When I first started diddling with blogging in July 2003, I never expected it to have cranked out this much content!

Those 5,000+ posts have also been accompanied by 59,686 comments and 1,873 TrackBacks. Pretty insane. if you ask me.

I am working on some changes as 2007 comes to a close. I'm considering moving the entire blog over to a dedicated domain (rather than being hosted by typepad). Several other ideas are in the works that I am very excited about -- including pulling some screens off of Fusion IQ for the blog.

I think you will find 2008 to be a very interesting year . . .

Thanks to all of you who contribute to the process -- the ideas, suggestions and the comments especially -- they are all greatly appreciated.

Existing Home Sales Drop 20%

Monday, December 31, 2007 | 10:30 AM

in Data Analysis | Psychology/Sentiment | Real Estate

First, the bad news: Housing is still a mess, and is likely to be a drag on the consumer spending and the economy in 2008. Year-over-year sales dropped 20% from November 2006.

However, I am going to surprise a few people, and point out that this single month's report actually has some good housing news in it:

- Purchases rose 0.4%;

- October sales were revised upwards;

- Median home price fell 3.3 percent.

- Existing homes for sale fell 3.6% percent to 4.27 million. That's 10.3 months' supply versus 10.7 in October.

The most astonishing piece of news in the NAR release was this dollop of reality that seemed to have accidentally crept in:

“Inventory is still high, and further reduction in prices may be required in some areas to induce buyers back into the market”

-Lawrence Yun, NAR chief economist.

Of course, like a junkie, they just can't help themselves, going back for another hit of that sweet, sweet shit:

“Near term, existing-home sales should continue to hover in a narrow range, just as they have since September, and that’s good news because it’ll be a further sign that the housing market is stabilizing,”

Sure it will. Once, crack, head, always a crack head . . .

Source:
Existing-Home Sales Rise in November, Market Likely Stabilizing
NAR, December 31, 2008
http://www.realtor.org/press_room/news_releases/2007/ehs_dec07_ehs_rise_in_november.html

Possible Improbables

Monday, December 31, 2007 | 08:27 AM

Doug Kass is out with his annual list of long shot events that have a better chance of occurring than most people expect. They are, as always, quite intriguing and thought provoking.

Interestingly, almost half of Kass' last year's improbable surprises came to pass (up from 33% in 2006 and 20% in 2005).

Its subscription only, but will eventually get moved to the free site. Consider this a teaser -- these are just the headlines, without the full analysis/explanation.

Without further ado, here is the excerpted list of 20 improbable surprises:

Kass' 20 Surprises for 2008

1. The Housing Depression of 2007 morphs into the Retail Spending Depression of 2008.

2. Corporate profits drop by 10% in 2008.

3. The S&P 500 Index falls by 5%-10% in 2008.

4. Volatility pushes even higher. Daily moves of 1%-2% become commonplace.

5. The Federal Reserve eases monetary policy in 2008, with nearly every meeting accompanied by a 25 bp cut.

6. Growth in the Western European economies deteriorates.

7. The Chinese juggernaut continues apace. Chinese stock market doubles again in 2008.

8. The Japanese market puts on a surprising resurgence.

9. The housing bust accelerates. High profile bankruptcies in 2008 include Countrywide Financial (CFC), Beazer Homes (BZH), Hovnanian (HOV), Standard Pacific (SPF), WCI Communities (WCI) and Radian Group (RDN).

10. Financial stocks fail to recover.

11. Research in Motion (RIMM), Apple Computer (AAPL) and Google (GOOG) move into bubble status and their shares double in 2008.

12. Yahoo! (YHOO) and eBay merge. So do Amazon (AMZN)and Overstock.com (OSTK).

13. General Electric (GE) will sell NBC Universal to Time Warner (TWX), which will not sell or spin off AOL.

14. U.S. dollar's value falls by over 10% in 2008; Gold rises to over $1,000/oz.

15. The price of crude oil eclipses $135/barrel.

16. Acts of cyberterrorism occur that compromises the security of a major government. Financial markets will be exposed to hackers.

17. The Hedge fund community are disintermediated in 2008. Outflows accelerate.

18. There are several Enron-like accounting scandals in 2008.

19. Democrats Clinton/Kerrey and Republicans McCain/Crist represent their parties in the Presidential/Vice Presidential contest in November. Democrats grab the White House.

20. Sovereign Wealth Funds become targets of American politicians.

Thanks for putting this together, Doug. It's a terrific, fun exercise in creative thinking. (The full version can be seen at Real Money Silver).

Source:

Kass' 20 Surprises for 2008
Doug Kass
Real Money Silver, 12/31/2007 7:56 AM EST
http://www.thestreet.com/b/dps/te/20071231/theedge1.html#entryId10396433

New Year's Linkfest

Sunday, December 30, 2007 | 11:50 AM

in Financial Press

Another wild and woolly week on the Street of dreams: Retail and Real Estate stunk up the joint, while commodities extended their gains.

The big winners were Gold (+3.3%) Oil (+2.9%) and Emerging Market stocks (+2.6%) as the dollar dropped 1.1%. Over the past 52 weeks, they are up 32.2, 57.2, and 36.6% respectively.

US Treasuries of all durations were up modestly.

This week's losers were REITs (-2.1%), the Russell (-1.8%) and the aforementioned greenback. The S&P, Dow and Nasdaq all lost less than a percent on the week.

Earnings and GDP expectations for Q4 are shrinking, while hope still lives that the worst of the credit crunch is behind us. This looks to be the first fourth-quarter decline in the major indices since 2000, with the Standard & Poor's 500 Index declining 3.2% QTD.

Barron's Trader column noted:

"Against this backdrop, market sentiment has become a curious mix between what is said and what is done. For all the chatter about a looming recession, most traders are still reluctant to bet against the market -- not when cash-rich foreign buyers are hovering with the intensity of hawks browsing for mice.

The latest Merrill Lynch survey of global money managers shows 80% who deem double-digit earnings growth "unlikely" next year, and 74% who believe we're in the late stage of this business expansion. Yet the Nasdaq Composite Index is up 11% this year. And analysts still expect profits to grow 14.7% in 2008 -- in part as the second half meets easier comparisons."

Monday brings us Existing Home Sales, Friday is Non-Farm Payroll, with a few other economic releases in between -- including the December 11 FOMC minutes.

Enough Ben Steinery! On with the linkfest:

INVESTING & TRADING

• U.S. Stocks Decline, Poised for Worst Fourth Quarter Since 2000: U.S. stocks fell and were poised for their first fourth-quarter decline since 2000 after government reports on durable goods and unemployment reinforced speculation the housing-market collapse will push the economy into recession. Lower-than-forecast orders for durable goods in November and an unexpected rise in jobless claims last week added to evidence that the housing slump is spreading to the broader economy. The Standard & Poor's 500 Index has declined 3.2 percent since the end of September, paring its 2007 advance to 4.2 percent. (Bloomberg)

• What do Elections Mean for Stocks?: Since 1950, stocks have risen in the last seven months of the year in 13 of 14 presidential election years, according to the Stock Trader's Almanac. See also Bespoke's look at PRESIDENTIAL ELECTION CYCLE DATA

• No end in sight for soaring art market: Art is hot. Despite turmoil in the financial markets, there are no signs that the art market is softening. The fall auction season in New York saw robust prices across most categories, with postwar and contemporary works in particular going through the roof. It seemed like a new record was being shattered every time an art auction was held. Over the last five years, wealthy buyers from Russia, China, India and the Middle East have greatly helped fuel the art market. (Associated Press)

• Don't Bet the Farm: All bubbles have catalysts, real or perceived. The tech-stock boom was driven by the belief that technology was changing both our lives and investment realities. And the residential-realty boom was driven by faith that interest rates would stay very low and that the baby boomers' wealth would keep the new, second- and vacation-home markets robust for decades. (Barron's)

• The Credit Crunch, as told by Dr. Suess

• Investors With Appetite For Risk Have Loads Of Options to Ponder: For adventurous investors, there may be deals hiding in the rubble of this year's market turmoil. Opportunities are cropping up in beaten-down sectors such as financial stocks, high-quality municipal bonds and even risky high-yield, or "junk," bonds. Even "closed-end" mutual funds -- a niche corner of the investment world that usually doesn't see much action -- may be worth a closer look. (Wall Street Journal)

• Gold to Pass Record in 2008 on Inflation, Survey Says: Gold will rise to a record in 2008, increasing for an unprecedented eighth consecutive year, as investors seek protection from accelerating inflation, metals analysts say. Gold will probably average $800 an ounce, compared with $696 this year, according to the median estimate of 37 traders, analysts and investors surveyed by Bloomberg News. Gold has gained 30 percent to $827.20 an ounce in London this year, its best year since 1979, when the Iranian revolution crippled crude- oil exports and U.S. inflation surpassed 13 percent. SEE ALSO Gold Bulls Eye $1,000 Bullion

• The WSJ looks ahead to 2008:
-Y2K Echoes -- Or Not

-Happy New Year? Don't Bank On It
• Bonded by Buffet: As Berkshire Hathaway (BRK) quietly moves into the business of municipal bond insurance, rivals and bond issuers question the outcome. For Warren Buffett, timing is everything. And with credit markets tightening, prices likely to rise, and longstanding competitors on the ropes, it may be the perfect time for the überinvestor to move into the business of offering bond insurance for cities, states, and government bodies (BusinessWeek) see also The Beauty of Broken Moats

• John M. Berry says "Subprime Losses Are Exaggerated by Some" As the U.S. savings and loan crisis worsened in the 1980s, analysts tried to top each other's estimates of the debacle's cost to the federal government. Much the same thing is happening now with losses linked to subprime mortgages, with figures of $300 billion to $400 billion being bandied about. A more realistic amount is probably half or less than those exaggerated projections -- say $150 billion. That's hardly chicken feed, though not nearly enough to sink the U.S. economy. (Bloomberg)

• Dividends, Buybacks Feel the Squeeze: In the past few years, U.S. companies have been passing out a lot of cash in the form of share repurchases and dividends. And financial companies have been among the most generous. Companies in the Standard & Poor's 500-stock index repurchased nearly $450 billion in stock through the first three quarters of this year, according to S&P -- up from $430 billion for all of 2006 and $350 billion for 2005. But those financial firms are likely to be stingier in 2008. (Wall Street Journal)

• Subprime's Hidden Cost Is Shrinking Leverage: In this season of stock taking, the picture past and future for financial markets is far from pretty. The reason? Subprime. If you didn't know what subprime meant at the start of the year, it was hard to avoid its meaning by year end.The big question now is what will the subprime crisis and ensuing credit crunch cost. (Bloomberg)

ECONOMY

The Wall of worry continues to build:

• Durable Goods Flat, Business CapEx Spending Falls

• Recession battle:
Greg Mankiw on How to Avoid Recession? Let the Fed Work (NYT)

Nouriel Roubini says The Latest Macro News Strongly Signal Recession Ahead (RGE)
• Crisis may make 1929 look a 'walk in the park' Twenty billion dollars here, $20bn there, and a lush half-trillion from the European Central Bank at give-away rates for Christmas. Buckets of liquidity are being splashed over the North Atlantic banking system, so far with meagre or fleeting effects. As the credit paralysis stretches through its fifth month, a chorus of economists has begun to warn that the world's central banks are fighting the wrong war, and perhaps risk a policy error of epochal proportions (UK Telegraph)

• TIMELINES OF THE GREAT DEPRESSION

• Financial Crises of the Future: Will future crises look more like those of the 1990s or of the 1890s? Was the Argentine crisis of 2001 a harbinger of a return to self-contained crises? And if international spillovers remain possible, are there implications for global governance in the area of financial markets? To shed light on these questions, it is useful to analyze the historical record. (IMF)
RETAIL/SHOPPING

• Real Holiday Spending Was Negative in 2007

• How Wal-Mart stole Christmas: For nearly a decade, Wal-Mart Stores Inc. has been outperformed by Target Corp. when it mattered the most - at holiday shopping time.Maybe not this year.Although the final sales results aren't in yet, analysts are confident that Wal-Mart has finally trumped its closest competitor in the 2007 holiday sales race. (CNN/Money)

• Plasma Screens are increasingly being found in the bargain bin: see this 50" Panasonic 1080p at $1749 as an example.

• More Retail Sales Hype and Retail Post-Mortem
HOUSING

• FeeDisclosure.com: FeeDisclosure has developed a (patent pending) online portal to breakdown complicated real estate vendor fees. The FeeDisclosure system exposes the excessive transaction fees commonly referred to as "junk fees" by providing consumers with the knowledge to make informed decisions about real estate and mortgage transaction closing costs.

• New One Family Home Sales: Ugly!

• Vultures wait for repricing: The vultures are circling.In an abrupt reversal, the commercial property industry that started 2007 giddy about its prospects enters 2008 facing falling property values, a seized-up credit market and concerns a slowing economy could dampen future leasing and rental rates.While only several months ago investors expected to sell and resell office buildings at escalating prices regardless of their financial performance, vulture investment funds are raising money to pounce on bargains when lenders start unloading real estate that owners can't afford to hold. (Chicago Tribune)

• Dollar Value Inventory of Unsold Homes

• Defaults moving beyond sub-prime: Thought the mortgage meltdown was just a sub-prime affair? Think again. There's another time bomb waiting to explode, experts say: risky loans made to people with good credit. So-called pay-option adjustable-rate mortgages, or option ARMs, were the easiest and most profitable home loans for lenders and brokers to make for much of this decade. Last year, they accounted for about 9% of the volume of all mortgages made in the U.S. and were especially popular in California, Florida and Nevada -- states where home prices rose the most during the housing boom and are now falling most sharply. (L.A.Times)

• Shiller: Single-family Housing Market is "Grim"

• Officials Falling Behind on Mortgage Fraud Cases: The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said. (NYT)

• How they got housing wrong: Before you put much hope in forecasts for a 2008 rebound in the battered housing market, consider this: A year ago at this time many top economists were looking for that recovery to begin in 2007.Instead, the year saw historic declines in nearly every measure of housing strength and home building, and left a trail of predictions from some of the nation's top economists that look - at best - foolish. (CNN/Money)

• The Making of a Mortgage CDO (WSJ Interactive)

• Mortgage applications fall to lowest in a year: U.S. mortgage applications sank last week to the lowest level since the end of last year despite falling borrowing costs, an industry trade group said on Thursday. The Mortgage Bankers Association's seasonally adjusted mortgage application index fell 7.6 percent in the week ended December 21 to 603.8 -- its lowest reading since falling to 575.6 in the December 29, 2006 week. (Reuters)
WAR/MEDIA/POLITICS/ENERGY

• Iraq suicide attacks on the rise: Although overall violence in Iraq has dropped to levels not seen on a sustained basis since the summer of 2005, suicide bombings appear to be making a comeback, according to figures released Saturday by the top U.S. commander in Iraq. Responsibility for such attacks typically is claimed by the Sunni militant group Al Qaeda in Iraq, which Gen. David H. Petraeus said remained the greatest threat in the country. (L.A.Times)

• Tired of all the crap coming from the candidates on the campaign trail? Fact check 'em! Go to the Annenberg Public Policy Center of the University of Pennsylvania's Factcheck.org.

• The Airport Security Follies: A pilot explains why "Six years after the terrorist attacks of 2001, airport security remains a theater of the absurd. The changes put in place following the September 11th catastrophe have been drastic, and largely of two kinds: those practical and effective, and those irrational, wasteful and pointless." (Jetlagged)

• The fight over emissions standards: Environmental activists and sympathetic public officials were naturally upset by the decision in Washington the other day to reject California's "clean car" law. No surprise there. After all, more than dozen other states, including Colorado, supported California's effort to tighten emission rules for new motor vehicles with the intent to cut greenhouse gas emissions. What has proponents of the California standard really fuming, though, is news that Environmental Protection Agency chief Stephen Johnson made his ruling against the advice of EPA's career staff. (Rocky Mountain News) Gee, whatever happened to States Rights?
TECHNOLOGY & SCIENCE

• Move over CDs: DVDs, Concerts also slump

• Remember The Milk for Gmail is a Firefox extension that allows you to manage your tasks in Gmail (complete, postpone, and edit tasks), add new tasks (and connect them with your emails, contacts, and Google Calendar events), automatically add tasks for starred messages or specific labels, and much more! (GOOG)

• Ted Talks: Of all the distractions, entertainment, and discussions that the inter-tubes provided in 2007, I think my favorite discovery was the Ted Talks. It consistently provides the most curious, thought-provoking, surprising sets of ideas found anywhere on the web.

• The Death of High Fidelity: Why do Record labels ask the mastering engineers to crank up the sound levels so high that even the soft parts sound loud? Over the past decade and a half, a revolution in recording technology has changed the way albums are produced, mixed and mastered — almost always for the worse. Engineers do that by applying dynamic range compression, which reduces the difference between the loudest and softest sounds in a song. Says one producer: "I think most everything is mastered a little too loud. The industry decided that it's a volume contest." (Rolling Stone) See also Overcompression

• Scientists: Time Itself May Be Slowing Down

• Stanford's nanowire battery holds 10 times the charge of existing ones: Stanford researchers have found a way to use silicon nanowires to reinvent the rechargeable lithium-ion batteries that power laptops, iPods, video cameras, cell phones, and countless other devices.The new version, developed through research led by Yi Cui, assistant professor of materials science and engineering, produces 10 times the amount of electricity of existing lithium-ion, known as Li-ion, batteries. A laptop that now runs on battery for two hours could operate for 20 hours, a boon to ocean-hopping business travelers.

• Yahoo's! Picks of the Year

• Will The iPod Kill Blockbuster? Forget the cavernous big box stores that laid waste to the retail landscape a decade ago. Apple (AAPL) Chief Executive Steve Jobs' tiny iPod has turned his company into a category killer for the digital era--first wiping out music stores and now, potentially, the corner video store.Starting in mid-January, the Cupertino, Calif., computer and gadget maker will take on Blockbuster (BBI) and Netflix (NFLX) by renting movies from Fox on its iTunes digital media store, according to a report first published in the Financial Times earlier this week. (Forbes) Also, Why Apple Needs Movie Rentals

MUSIC BOOKS MOVIES TV FUN!

• A Different Kind of Music List: Best of 2007: Following our successful outings the past three years, I'm at it again. Here's our Different Kind of Top 10 Music List for 2007

• Oscar Peterson has been recording and performing for over half a century. He passed away Christmas Eve '07 at the age of 82. Peterson may be the single most recorded piano player -- ever.

• My favorite t-shirt from The Shirt Project

• The 50 Most Loathsome People in America, 2007

• From 1943 to 1945, director Frank ("It's a Wonderful Life") Capra, Theodor "Dr. Seuss" Geisel, and most of the geniuses behind Bugs Bunny's best cartoons teamed up to make a series of animated, instructional shorts for the Army: Private Snafu.

• Science Tattoos

• A Very Merry (Merc) Christmas from your friends at Blackwater

That's all from the last weekend linkfest of the year -- we wish you and your families a happy, healthy, and successful 2008!

~~~

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, send email to thebigpicture [AT] optonline [DOT] net.

Cool site of the day: FeeDisclosure.com

Sunday, December 30, 2007 | 09:38 AM

in Consumer Spending | Real Estate

FeeDisclosure.com: FeeDisclosure has developed a (patent pending) online portal to breakdown complicated real estate vendor fees.

The FeeDisclosure system is designed to expose excessive transaction fees ("junk fees") by providing consumers with the knowledge to make informed decisions about real estate and mortgage transaction closing costs.

The site is still in Beta, but I am looking forward to seeing how this plays out with consumers over time.

Something like this is long overdue . . .

TED Talks

Saturday, December 29, 2007 | 09:49 AM

in Video | Web/Tech

Of all the distractions, entertainment, and discussions that the inter-tubes provided in 2007, I think my favorite discovery was the Ted Talks. It consistently provides the most curious, thought-provoking, surprising sets of ideas found anywhere on the web.

Instead of watching online, I finally clicked over to the Apple iTunes podcast section, went to TedTalks and selected "Get All." An hour later, all 101 chats were downloaded and iPod ready. Sure, its not as funny as Ricky Gervais' podcasts -- but they are a whole lot more educational.

Its internet Barry's gift to commuting Barry for 2008 . . .

Friday Evening Jazz: Oscar Peterson (II)

Friday, December 28, 2007 | 07:00 PM

in Digital Media | Friday Night Jazz | Music

Oscar Peterson has been recording and performing for over half a century. He passed away Christmas Eve '07 at the age of 82.

He may be the single most recorded of all piano players.

Oscar bridged the swing and bop eras, rooting himself in a style that was at the same time stunningly complex yet soulfully elegant.

Nobody used more notes to swing! Oscar is sometimes dismissed because he wasn't groundbreaking in the way that many of his contemporaries were. But the range of expression he achieved on the piano along with his technical prowess is hardly rivaled in mainstream jazz.

Many consider his solo recordings of the late 60s and early 70s to be his most outstanding work, but do not overlook his trio recordings both with Ray Brown and Ed Thigpen and later with Joe Pass and Niels-Henning Orsted Pederson.

The live album "The Trio" from 1973 (not to be confused with a Verve release of the same title) is a great recording of Oscar with Pass and Pederson and shows Oscar at his most virtuosic. Check out the Brown Thigpen work live here.

For a compendium of his 1960s work in both trio and solo settings, the excellent box set "Exclusively for My Friends" will keep you entertained for years.

Of course, there are the standard "songbook" albums (George Gershwin, Cole Porter, etc.) and the duets with greats like Ella Fitzgerald, Count Basie, Clark Terry and Dizzy Gillespie.

I am also partial to A Jazz Portrait of Frank Sinatra.

The 1962 album "Night Train" with Ray Brown and Ed Thigpen is also a favorite. It showcases Oscar at his best on both ballads and uptempo numbers and he really shows his blues chops.

Oscar Peterson will be missed . . .

Sources:

80th Birthday Tribute to Oscar Peterson http://www.npr.org/templates/story/story.php?storyId=4829211
PLAYER
http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=1&islist=false&id=4829211&m=4830843

Oscar Peterson's 'Jazz Odyssey'
Hear an extended version of Bob Edwards' interview with Oscar Peterson.
http://www.npr.org/templates/story/story.php?storyId=1170182

Oscar Peterson, 82, Jazzâs Piano Virtuoso, Dies
RICHARD SEVERO
NYT, December 25, 2007
http://www.nytimes.com/2007/12/25/arts/25peterson.html

A Jazz 'Behemoth' Moves On
NAT HENTOFF
WSJ, December 28, 2007
http://online.wsj.com/article/SB119878787299653457.html

Tributes paid to Oscar Peterson
BBC, Tuesday, 25 December 2007, 08:00 GMT http://news.bbc.co.uk/2/hi/entertainment/7159772.stm>

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