20090724190000A helluva week in the market — The Dow is over 9,000, and the earnings are just fantastic (well, maybe they are better than lowered expectations) and things are looking, well if not up, then at least not down into the abyss.

REITs were the big winner, up 8.3% for the week (still off some 40% from their recent highs); The Russell 2000 gained 5.6%, which puts them a mere 23% from their 52 week highs. The S&P and Dow added just over 4%, which places them within just over 20% of their 52 week highs. The Nasdaq, which tacked no 4.2% is a mere 15% from 52 week tops. Of course, all of these indices are far far below their all time highs.

Taking a closer look  at the rally off of the March lows, Barron’s Trader column notes:

HERE’S A SNAPSHOT OF JULY’S ROMP, courtesy of Bespoke Investment Group: From their July 10 low, the 50 smallest stocks in the S&P 500 had rebounded 17.2% through Thursday, outgunning the 50 biggest stocks’ 9.7% gain. The 50 most heavily shorted stocks have jumped 17.6%, versus just 8.8% for the 50 least-shorted names. Companies raking in foreign revenues outran domestic earners, a sign that traders are still uneasy about the dollar.

Besides short-covering, there are also ample signs of bargain-hunting and risk-guzzling. The 50 stocks with the lowest price/earnings ratios jumped 18.4%, the best performance of any decile. The 50 stocks with the worst analyst ratings are up 12.7%, versus 8.9% for the most beloved companies. And the 50 stocks that fell the furthest during the June correction have bounced back most resoundingly, their 17.4% rise trumping the 7.4% for the correction’s top performers.

Fascinating details.

Where to begin this week? The Dollar? Retail Sales? Yields? Housing?  The 10 consecutive up day for the Nasdaq? No matter — we got it all covered

Enough Ben Steinery! On with the linkfest:

INVESTING & TRADING

Dow Above 9,000 for the First Time Since January (NYT)

Up 40%, but Still Feeling Down (NYT)  The truth is that for most investors, it’s more important to avoid big losses than to rack up big gains. That may seem a milquetoast approach, but in the miserable market of 2008 and early 2009, minimizing losses was the best that most people could do. And because of the ugly math of investing, it has been extraordinarily difficult to recover from big declines.

S&P 500 Short Interest Drops, Led by Banks, as AIG Bets Shrink (Bloomberg)

The long-awaited Dow Theory bull market signal finally arrived (Investment PostCards)

FIFTY WAYS TO KILL RECOVERY Nearly every state government is required to balance its budget. When times are bad, jobs vanish, sales plummet, investment declines, and tax revenues fall precipitously—states have to raise taxes or cut spending, or both, and that’s precisely what they’re doing:  amplifying the effects of the downturn, instead of mitigating them. (New Yorker)

Is the party over for Microsoft? JOHN DVORAK’S says Software giant’s too distracted by shiny objects  (Marketwatch)

Goldman and Morgan are a study in contrast To oversimplify, Goldman and Morgan are now a contrast of offense versus defense. Goldman (Barron’s)

Great barrier grief Countries that clung fast to the gold standard in the early 1930s resorted most to protectionism (The Economist)

Schumer Presses SEC for Ban on ‘Unfair’ High-Frequency Trades (Bloomberg)

Visualizing One Trillion Dollars (Video)

• 1990s Tech Guru Michael Murphy is back, covering gold, currencies,  and macro economic issues — at Seeking Alpha.

The New Model for Financial Research? (Advisors for Advisors)

Accountants Gain Courage to Stand Up to Bankers (Bloomberg)

Warren Buffett to Teach Kids About Finance in Cartoon (Bloomberg)    Video here


ECONOMY

Markets keep climbing a wall of worry:

A long way to go: The global recession is coming to an end, but the ingredients of a lasting recovery are still missing  (The Economist)

Lasting recession works way into pop culture (MSNBC)

Do We Need More Stimulus? (Delong)

Job Cuts Outpace Economic Decline (If no WSJ, go here)

When Debtors Decide to Default (NYT)

Sales Fail to Keep Pace With Profits as Economy Stays Sluggish (Bloomberg)

Dropping the shopping:  Can America wean itself off consumption? The first of a series on how the world’s four biggest economies must change to ensure sustainable global growth  (The Economist)

Henry Kaufman, writing in Barron’s, discusses A Long Road to Recovery (Barron’s)

Association of American Railroads has begun publishing “Rail Time Indicators,” their monthly look at Rail Transport related data.


HOUSING

• The U.S. currently has enough vacant housing to put the entire population of the U.K., with room left over for Israel.  (Infectious Greed)

New Appraisal Code Raises a Row (WSJ)

Seasonality factors in Existing Home Sales (Hanson)

Lennar Signals Fleeting Builder Rally as Buyers Flee (Bloomberg)

Foreclosure-relief program launched for Countrywide Financial customers (Denver Biz Journal)


FEDERAL RESERVE

Chairman Ben Bernanke confronts challenges to Federal Reserve’s record (LA Times)

Light at the end of the Tunnel?

• The NYT Week in Review has dueling views on whether Ben Bernanke should be reappointed.

Nouriel Roubini votes yes: “Ben Bernanke … deserves to be reappointed. Both the conventional and unconventional decisions made by this scholar of the Great Depression prevented the Great Recession of 2008-2009 from turning into the Great Depression 2.0.

Anna Schwartz votes nay: As Federal Reserve chairman, Ben Bernanke has committed serious sins of commission and omission — and for those many sins, he does not deserve reappointment.

Taylor Says Fed Gets Rule Right, Goldman Doesn’t (Bloomberg)


WAR/MEDIA/POLITICS/ENERGY

An Open Letter To The Financial Media (Zero Hedge)

Build the Wall: Why Media Should Charge for Online Content (CJR)

Obama leaves foxes in the Commodity Futures henhouse (True Slant)

Inside Bush and Cheney’s Final Days (Time)

Health Care: A Case of Getting What You Pay For (Washington Post)


TECHNOLOGY & SCIENCE

A Special Twitter Guide for Businesses

Hubble image shows debris from Jupiter collision (USA Today)

100 Things Your Kids May Never Know About (Geekdad)

Music Streams That Soothe an Industry:  Many music industry observers now believe that there is a fundamental shift under way: from illegal downloads to licensed streaming services like MySpace Music, imeem and Spotify, where users can play any song, anytime and — coming soon — on any device (NYT)  See also Pandora’s Back (The Big Money)

Clouds in climate ‘vicious cycle’ (BBC)

PowerPoint considered militarily harmful Writing in the Armed Forces Journal, retired Marine T.X. Hammes excoriates PowerPoint and its impact on decision-making in the military (boingboing)

Amazon Apologizes For Kindle Flap (Info Week)

Scientists Worry Machines May Outsmart Man (NYT)

Get Me Rewrite: Microsoft Alters Laptop Hunter Ads (PC World)


MUSIC BOOKS MOVIES TV FUN!

Monday’s WSJ reviews some good beach reads

The I-Hate-My-Cellphone Film Festival (Video)

CNBC’s New Home Page (Amusing!)

• What’s this? They’re making a new Tron movie!

• What you need to know about Cash for Clunkers

Armando Iannucci: What the In-the-Loop director taught Sacha Baron Cohen. And Ricky Gervais. And Stephen Colbert (Slate)

Window on the body: CT scans become art (New Scientist)

Top 10 George W. Bush YouTube Moments

That’s all from a sticky hazy hot humid weekend in the NorthEast, where Summer has finally arrived . . .

~~~

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.

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

33 Responses to “Weekend Linkfest”

  1. MikeBC says:

    Glenn Greenwald’s Salon column on the war waged against TARP watchdog Neil Barofsky

    http://www.salon.com/opinion/greenwald/2009/07/26/barofsky/index.html

  2. DL says:

    Those who believe that the oil markets (and oil futures markets) are “manipulated” may want to read the following:

    http://www.theoildrum.com/node/5606#more

  3. uno says:

    BR: The Schumer/Bloomberg link doesn’t work — has an extra couple of characters tacked onto it (cs).

    Correct link: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aO8DoToaITO8

    ~~~

    BR: Fixed!

  4. Pete from CA says:

    “Chen Guojun, the general manager of Jianlong, was beaten to death by workers who were angry that Chen was paid about three million yuan ($440,000) last year, while Tonghua’s retired workers received as little as 200 yuan a month, the center said.”

    http://www.reuters.com/article/worldNews/idUSTRE56P09620090726

    (Social) change you can believe in! ;)

  5. investorinpa says:

    Wow, I remember this Michael Murphy guy…he used to write letters that covered whatever the hottest tech stocks were way back when, most of which came careening off a cliff and very few that are still around anymore. Back in the day he had a pornstar mustache and a realtor’s smile in his picture. It usually is the best indicator of a bull market to come when this guy reemerges, investors take note!!!

  6. in reference to this: Great barrier grief Countries that clung fast to the gold standard in the early 1930s resorted most to protectionism (The Economist) , piece of Classic Agitprop.

    This http://blog.mises.org/archives/010347.asp rejoinder..

    “One of the many myths today receiving retrospective support from today’s servants of power is that adherence to the gold standard caused the economy in countries that did so in the 1930s to recover more slowly from the Depression.

    Probably the leading proponent of this apology is Barry Eichengreen, author of the very-successful “Golden Fetters.” As this article in the Economist reports, he has now produced a paper showing that, with one enormous exception, countries “clinging” to the gold standard too long adopted protectionist policies more than did countries that did not. Duh…

    So, we’re tacitly invited to consider the proposition that countries that enacted protectionist trade policies recovered more-slowly from the Depression than did those that kept their borders more open to trade.

    I buy that!”
    ~~

    Past that, I’d buy one of These — http://www.laubly.com/1948tucker.htm

    Someone, really, want to tell me that GM y ChryCo Needed to remain ‘in one piece’? Can’t have Competition, now, can we? 60 years, the Game is the Same, #44 notwithstanding..
    ht tp://ww w.thefreedictionary.com/notwithstanding

  7. investorinpa says:

    Item 5 on this entry: http://contraryriches.blogspot.com/2009/07/interesting-investment-ideas-to.html

    Landlords who lease property to the state are facing a new mandate that many say will impose higher costs at a time when the commercial real estate industry is already hurting.
    Building owners who sign new or renewed leases must now pay prevailing wages to janitors, mechanics, contractors and others who do work in the space being leased.
    Landlords are also feeling pressure to make concessions, such as months of free rent included in the leases, to keep the state as a tenant.

  8. Tom K says:

    from FIFTY WAYS TO KILL RECOVERY:

    “Think about the $787-billion federal stimulus package. It’s built on the idea that during serious economic downturns the government can use spending increases and tax cuts to counteract the effects of consumers who are cutting back on spending and businesses that are cutting back on investment. So fiscal policy at the national level is countercyclical: as the economy shrinks, government expands.”

    LOL – James Surowiecki is either an idiot or has consumed too much Keynesian kool-aid. He claims spending from the $787-billion federal stimulus package will counteract the pullback in consumer spending, but fails to acknowledge the bulk of the spending won’t occur until AFTER most economists predict the economy will already be in recovery.

    I’d love to see this article accompanied by a chart showing when stimulus money will hit the economy overlaid with administration GDP growth projections. The chart should be illustrated in crayon.

    Also, Surowiecki never mentions the core reason so many states are in dire straits: They spend all revenues during economic growth years and never plan for economic downturns.

    I thought claims that ‘business cycles no longer exist’ died in 2001.

  9. vaughn says:

    ‘things are looking, well if not up, then at least not down into the abyss.”

    tell it to Charlie…
    http://www.oftwominds.com/blog.html

    This entire 10-day “rally” (or call it 12 days if you look only at the Nasdaq) simply doesn’t pass the “sniff test.” …..TA practitioners should be wary that volume is declining during this “rally.” Despite all the trickery, manipulation, tape-painting, propaganda and false “buy” signals, the market is showing very little participation as measured by volume.
    It’s really quite brilliant. Dump a few trillion dollars into “saving” the investment banking sector from any hardship (like well-deserved bankruptcy), spread another $787 billion around as mulch in the real economy (“stimulus”) and then “buy” a blazing-hot stock market rally for a relatively paltry sum which forces every mutual fund and hedge fund manager to jump on board lest they “underperform” and consequently find themselves unemployed.

    It’s like paying people to stand in line at a new restuarant opening; passersby will assume the food is outstanding and join the line. It’s only when the meal is served do they realize they’ve been conned.

  10. Onlooker from Troy says:

    I find the laments that the states are going to kill the recovery by having to actually balance budgets and make tough spending decisions laughable and pathetic. We’ve become so used to the crutch of deficit spending that we no longer even know how to make tough decisions and live within our means.

    Yes if we had saved during good times and therefore be able to spend more than current revenues during bad times to stimulate recovery that would be great (i.e. counter cyclical spending and budgeting practices). Even if we were only modestly in debt or God forbid not in debt at all, then some deficit spending would be palatable.

    But we gave up that option years ago when we continued to build debt and grow our economy on the back of ever increasing leverage. At some point you actually have to live with the consequences of past actions. That time is here. Too bad. We can’t just pretend it’s different and continue to steal from our descendants. We’ve become a society of children and thieves.

  11. franklin411 says:

    @onlooker
    What happens when the “stealing from our descendants” comes in the form of cutting school spending for the current generation of children to pay for the tax cuts we gave ourselves? Why doesn’t anyone talk about the “generational theft” that is the fact that the Baby Boomers were eligible for free college educations from the government, but now they are denying the same opportunity to today’s youth?

    “We must live within our means” is too often code for “I got mine!”

  12. Pete from CA says:

    Right, and “free college education for everyone” is sometimes code for “I am a teacher and I am frightened by cuts in state spending because I may not survive in the Real World”… :)

  13. aitrader says:

    Methinks the oracles sing a bit much praise of late on far too weak an ocular proof. The hand of man is rife of work wrough in sand and waves.

    Meaning: we’re reading waaaay to much in this rally with little more beyond funny moneyand faith to back it.

  14. Onlooker from Troy says:

    Everybody can always justify more spending with their own interests in mind. That’s what has gotten us here.

    “Don’t gore my sacred cow”

    It’s got to stop somewhere. And from where in my post did you deduce that I advocate educational spending anyway? You have no idea what my priorities would be or what form my choices would take. So shut your pie hole. Your friggen political bias that colors everything you say is just plain getting old.

    The fact is that it has to stop somewhere. And we all have to make some sacrifices. That, of course, is the hard part. But it doesn’t mean we just don’t do it and continue to spend like there’s no end to the money fountain.

  15. investorinpa says:

    On the topic of should bernanke stay or go, I would love to hear your opinion in a blog post, Barry…perhaps maybe even present it as a a poll to all your readers?

  16. Pat G. says:

    “S&P 500 Short Interest Drops, Led by Banks, as AIG Bets Shrink” (Bloomberg)

    It would have had to drop significantly in the last 10 days. Click on link, tune to “Largest % Increases” (SDS) up 180% thru 7/15.

    http://online.wsj.com/mdc/public/page/2_3062-nyseshort-highlites.html

    “Schumer Presses SEC for Ban on ‘Unfair’ High-Frequency Trades” (Bloomberg)

    WTF? They finally draw the line at market manipulation. I feel much better.

    “Accountants Gain Courage to Stand Up to Bankers” (Bloomberg)

    Here’s a good example of what’s wrong with this country. The bangsters control the “police“.

    “Do We Need More Stimulus?” (Delong)

    Absolutely. We better get it before Japan’s ruling government for the past 5 decades is voted out of office next month. Because the opposition has already stated that Japanese TIC flows into the U.S. are going to be reduced.

    “Chairman Ben Bernanke confronts challenges to Federal Reserve’s record” (LA Times)

    He doesn‘t agree that the FED has been terrible at the function for which it was mainly created, being; price stability. Here’s the dope. For 135 years before the FED was created in 1913, the USD appreciated by 11%. Since the Fed’s inception, the USD has depreciated by 95% in 95 years or 1% per year. But wait, it’s really a total of 106% if you factor in the loss of the gain in the USD prior to the FED. What possible argument could he present???

    “Obama leaves foxes in the Commodity Futures henhouse” (True Slant)

    Change you couldn’t possibly believe in. What a sad, disappointing commentary.

    “Health Care: A Case of Getting What You Pay For” (Washington Post

    These guys’ remind me of Fox News; on slants they take. Ask all those folks who have lost their jobs and consequently their health care; if it were indeed “a case of getting what you pay for”? An option to pay for COBRA? On unemployment? What about all those retiree’s benefits which are now part of the PBGC? Ask them, how it’s working for them. We work like dogs for this country, many at a minimum wage that is laughable. Then big business and/or big government “won’t” find a way to come together to pass a national health care initiative that benefits everyone. Besides, last time I looked, the U.S. ranked below some 3rd world countries in medical care. Again, the contradictions to this article’s title are obvious. Cheerleaders….

  17. Onlooker from Troy says:

    Ah yes, we knew this was coming:
    http://www.calculatedriskblog.com/2009/07/credit-card-debtors-embracing-darkness.html

    And the tide grows, and the waves build.

  18. Pat G. says:

    @ cvienne (July 24th, 2009 at 8:51 pm)

    Sorry my response is tardy. Been busy. You said; “Therefore, with everyone betting AGAINST the US dollar & Treasuries at the moment…it may actually turn out to be the place to be…UNTIL IT ISN’T…”

    I would argue that everyone is flocking to the USD and Treasuries right now which is causing them to be propped up despite the amount of debt which is being sold by the USG. Until it isn’t may be sooner than you think:

    http://www.silverbearcafe.com/private/07.09/dump.html

  19. scott simpson says:

    RE:http://www.investmentpostcards.com/2009/07/24/dow-theory-calls-a-bull-market/

    What kind of market assessment methodology is this? Dow theory gave a glaring BEAR market signal at the March BOTTOM with definitive new lows in the transports coinciding with the indstrials low. NOW 40% later it tells us that there is a bull market. Thanks, that’s exactly what I need. Cross Dow theory off my list of indicators. Follow it blindly? I think I’ll fade it! My outrage must be an indicator, hopefully someone can make money with it, I sure can’t.

    This “rally” smells fishy to me, and I am still short, despite multiple stopped out attempts.

    Former believer in Dow theory.

  20. Tom K says:

    “free college educations”

    Wow, I sure missed out on that.

  21. Pete from CA says:

    On the topic of volume: I looked at a bunch of volume data from the past 2 years, individual stocks in the S&P500, and it seems to me volume in general has been higher in the past year than in previous years. There were big spikes in March 09 and Oct 08 which skew the “average volume” to which we compare the daily activity. But I think it’s fair to say that volume has been higher any time this year than, say, in Aug-Oct of 2007.

    How does this change the “quality” of this rally?

  22. matt says:

    Oh man, that hotornot graphic is awesome. REITs, oil, and emerging markets make the top of the list. Party like it’s 2005.

  23. alfred e says:

    @DL: Thanks for the oil link. Apparently it has created some challenges to its credibility in the minds of some.

    But for me, it’s totally plausible given the details.

    Let someone dispute individual statements in the piece rather than assign a blanket blowoff.

    Besides who would ever expect producers to withhold production for higher prices as they rocket?

    SO it’s positive feedback loop with GS and BP in the middle holding all the information. Buy it.

  24. thetanman says:

    If they were serious about education Arne Duncan would not be SOE. All he did was increase funding for Chicago schools, but the district is still a complete blowout. And the beat goes on.

  25. dead hobo says:

    DL,

    I read your oil piece. It wasn’t written well … lots of facts but too ponderous while coming to the point.

    I think he said at the bottom, where he came to the point, I think, is that too much money is chasing too few contracts (paraphrased by me). Index funds are helping the price blow out. If this is what he said, I couldn’t agree more.

    The solution … remove index funds from the mix and leave the market as a match between buyers / sellers/ and actual speculators who risk delivery. Then price will reflect the actual economics of the situation and the world can intelligently plan of the best course of energy policy. It would be idiotic to make energy policy based on the pricing signals from this market since the price is so massively affected by derivative financial products only peripherally related to option contracts.

  26. dead hobo says:

    http://www.zerohedge.com/article/end-end-recession

    Read this for a good summary of the economy today

  27. FrancoisT says:

    RE: Accountants gain courage…

    Is it conceivable the FASB finally located their collective spine? Or is this an attempt to force the banksters to go on the record stating the rules don’t apply to them?

    If lobby money is the indicator to watch, I don’t give the FASB a snowball chance in hell of winning this skirmish. In any case, this fight could be interesting to watch.

    I’ll make sure the popcorn is in the pantry…just in case! ;-)

  28. alfred e says:

    @Dead Hobo: Could not agree more. Extremely well said.

    There is a serious problem that needs to be fixed. And there are real fixes available. But won’t happen.

    Limit players to producers, manufacturers and speculators WHO RISK DELIVERY. Little broader than I would like. But certainly an order of magnitude improvement.