The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

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I always find it interesting to see what books TBP readers are buying. In addition to throwing off a few shekels, the Amazon code embedded in links lets me track your collective purchases. Its anonymous — I don’t know who bought what — but I can tell what everyone who clicked on a given book bought.

These are the most popular books purchased in June:

Go the F**k to Sleep (Adam Mansback)

The Other Side of Wall Street (Todd Harrison)

Bailout Nation (Barry Ritholtz)

Boomerang (Michael Lewis)

This Time Is Different (Carmen M. Reinhart & Kenneth S. Rogoff)

Stock Market Wizards (Jack D. Schwager)

Dog Sense (John Bradshaw)

A Game of Thrones (George R. R. Martin)

The Big Short (Michael Lewis)

The Bean Trees (Barbara Kingsolver)

Lost Horizon (James Hilton)

Too Big To Fail (Andrew Ross Sorkin)

Some interesting reads for your weekend pleasure:

• In U.S. Monetary Policy, a Boon to Banks (Pro Publica)
• The CDO at the heart of the eurozone (FT)
• It’s That Time of Year: Calendar Can Trump Fundamentals (Barron’s)
• S&P to deeply cut U.S. ratings if debt payment missed (Reuters)
• BRUTAL TRUTH: Senior RIM exec tells all as co crumbles around him (BGR)
• A Fringe of Foam on Foreign Shores (Caixin)
• Clive Thompson on Establishing Rules in the Videocam Age (Wired)
• Basketball: Larger Than Real Life (Sports Illustrated)
• Triple Agent’: The final days of the suicide bomber who attacked the CIA (Washington Post)
• Monty Python members reunite for Graham Chapman film (BBC)

What are you reading?

An animated segment directed by Fred Crippen and designed by Saul Bass & Art Goodman from Stan Freberg Presents The Chun King Chow Mein Hour: Salute to the Chinese New Year (February 4, 1962).

Soundtrack is from Freberg’s album “Stan Freberg Presents The United States Of America”.

This cultural gem comes to us via Brain Pickings

This is exactly the sot of thing that investors need tio stay on guard against: filter bubble.

These are the search results, commentaries, recommendations, and other online data that have been filtered to match your predisposition, biases, and interests. Thus, they prevent you from seeing any data that challenges your assumptions, beliefs or positions.

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Example Citations:

Those same kind of surprises don’t seem to happen to me the same way with online information. In the digital world, I find myself tending toward existing in a self-selected filter bubble. It’s the difference between getting too much of what I like and not enough of what I need.
—Kevin Griffin, “Front: Your Former Vancouver Art Magazine,” The Vancouver Sun, June 24, 2011

The real danger, right now, is losing engagement due to people finding themselves in a filter bubble, where people are never challenged by viewpoints that oppose what they already think.
—Duncan Geere, “Clicktivism’s assault on dictators, politics and NGOs,” Wired UK, June 23, 2011

Eli terms this phenomenon a “filter bubble” — a special sort of echo chamber. The better our filters get, the less likely we are to be exposed to something novel, unexpected, or uncomfortable.
—Ethan Zuckerman, “Eli Pariser on Filter Bubbles,” My heart’s in Accra,” June 3, 2010

From Eloqua, comes this pretty awesome reference PDF: 20 Experts, 1 Awesome Resource: The Social Media ProBook.

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Carson Block of Muddy Waters spoke to Bloomberg Television’s Erik Schatzker about Sino- Forest earlier today.

Block said he is still short Sino-Forest and that he isn’t a “ninja assassin” who brings down stocks. He thinks of himself as someone who is “protecting investors.”

From ARS technica, comes this assessment of what News Corp purchase of MySpace actually totaled: $1billion dollars: Doing the math on News Corp.’s disastrous MySpace years

Business Insider musters up this chart to show just how a big a lead MySpace squandered over 3 years to allow Facebook to become the dominant player in the space:

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Here is a blast from the past: Precisely 4 years ago on June 30th, we took a closer look  at CDOs. It was in response to a remarkably sanguine question: CDOs: what’s the big deal?

We thought they were a big deal, and posed 10 Questions About CDOs.

Here are my 10 questions:

1. What would have happened had Bear Stearns simply let their two funds, High-Grade Structured Credit Strategies Fund and High-Grade Structured Credit Strategies Enhanced Leverage Fund, dissolve?

2. If CDOs are not priced to market, what are the actual values of these holdings?

3. How levered up are the funds that own the bulk of the CDOs? 10-to-1? 20-to-1? More?

4. How many Hedge funds are or have been taking quarterly or annual performance profits, based in whole or in part, on hoildings that have been marked to a theoretical value (“Mark-to-Model”) versus an actual value (“Mark-to-Market”)?

5. Liquidity has been a driving force behind M&A activity, share buybacks, and leveraged buyouts. Might the CDO situation somehow impact liquidity?

6. Might a liquidation in a CDO/illiquid derivative fund spread to other asset classes?

7. How widely held are the toxic CDO tranches in funds that are self-decribed as “conservative” or “risk averse?”

8. How accurate are the major ratings firms (Moodys, Standard & Poors, Fitch) assessment
of these products. Are these outfits arm’s length objective raters, or
are they merely corporate whores who play for pay?

9. After the final chapter is written on CDOs, what might the total losses on the $250 Billion in quarterly CDOs that Wall Street has created actually be? 10 Billion? 100 Billion? 1 Trillion?

10. How much will systemic confidence be impacted if there is a
series of large fund failures due to CDOs? What impact might that have on the rest of the markets?

The point being: All that was required to recognize the brewing trouble was a willingness to ask questions, ignore traditional assumptions, question authority, and challenge what the “experts” were saying.

What trouble might be brewing now . . . ?

In sharp contrast to the NY, Philly and Dallas Fed surveys, the Chicago PMI at 61.1 was well above expectations of 54 and up from 56.6 in May but down from 67.6 in April. It joins the Richmond survey in bucking weakness in other regions. Because of the large auto sector influence of the Midwest, it’s possible that the Japanese auto supply chain recovery, as seen in the Japanese May IP data yesterday, helped sentiment. New Orders rose to 61.2 after falling almost 13 pts in June but at 61.2 it is the 2nd lowest since Aug ’10. Backlogs did fall below 50 for the 1st time since Sept ’10. Inventories plunged to 46.9 from 61.6 and likely reflects the influence of Japan. Production rebounded by 11 pts after a 14 pt drop in April. Employment fell 2.1 pts to 58.7, the weakest since Nov ’10. Prices Paid fell 8 pts to the lowest since Nov ’10. Bottom line, as mentioned, Japan slowing coming back likely resulted in the bounce back in the Chicago PMI. With all the mixed readings around the country, tomorrow’s national ISM will reconcile all and will be the most important data point of the week as we shift our focus back to the economy after all the Greek drama this week. Peter Boockvar