LinkFest 4.22.07

More Power!

That was Friday’s exclamation mark on a week that was all upside. This was the 3rd consecutive week of gains for the Dow, with 15 of the past 16 sessions in the green. The Industrials tacked on 2.8%, as  Caterpillar (CAT) and Honeywell (HON) showed the upside of a weak dollar. The S&P500 added 2.2%. Its less than 3% from its all-time highs of March 2000. The laggards? Technology (Nasdaq gained 1.4%) and small caps (Russell 2000 rose 1.2%). 

A combination of more M&A activity, better earnings then (lowered) expectations, and perceived modest inflation data were the key reasons given.

Barron’s Trader column noted that "why the market climbed isn’t nearly as telling as how it
climbed. The market’s breadth wasn’t always convincing, with fewer
stocks contributing to this advance than during the February rise.
Stocks look stretched in the short term, with the S&P 500 running
more than 3.5% ahead of its 30-day moving average."
But, they noted, momentum remains to the upside.

The coming week will focus on earnings, and the prelim look at Q1 GDP out on Friday. 

Given all that, we have lots of good stuff to cover this week. With no further adieu, linkfest:

INVESTING & TRADING

•  S&P500 is Back in Black for the first time since April 2000

A profit gusher of epic proportions:  The grand total: $785 billion, a 29% increase over 2005. Those returns
obliterated the previous cyclical peak, $444 billion, achieved in 2000
at the height of the tech explosion. Put simply, American companies are
enjoying the most sumptuously profitable period in the 500′s 53-year
history. Last year post-tax profit margins hit 7.9%. That’s 27% higher
than the 6.2% posted in 2000, then lauded as exceptional. (Fortune) See also 20 most profitable companies.

Short Interest Precludes Correction:
The record number of short bets has created a floor under the markets. Consider that if you think you are not investing with the herd . . .

Is the Dow’s Recovery a Mere Illusion? The dollar’s decline makes the performance of U.S. equities rather less impressive to global investors, especially Europeans, as Barron’s Roundtable member Marc Faber has emphasized repeatedly. While the Standard & Poor’s 500 was up 15.8% in dollars last year, it gained only about 1.6% when measured in euros. And the S&P 500′s 1.6% nominal gain for the first quarter was nil in euro terms. (Barron’s)

1987 versus 2007?:
I keep saying I am not a fan of this parallel, but that doesn’t stop
Street.com readers from sending me all sorts of charts . . .

Uranium Contract To Debut on Nymex  The futures contract would be designed to offer the operators of nuclear-power plants a vehicle to hedge against rising prices. It would also provide a forum to bet directly on gains and falls in the price of uranium, rather than speculating on the fortunes of companies that mine the metal (Wall Street Journal)

An Actively Managed ETF?

Great minds don’t think alike about index funds: When John Bogle, founder of the Vanguard Group, introduced the first retail index fund in 1976, he sparked a revolution in investing: Throw out the fund manager, keep costs low, and weight the stocks in the portfolio by their current market value. Today, $3 trillion in pensions and mutual funds are indexed. Now Jeremy Siegel, a professor at the University of Pennsylvania’s Wharton School and author of Stocks for the Long Run, has reinvented indexing. Since June, his company, WisdomTree, has rolled out more than two dozen funds that are indexed according to a company’s earnings or dividends, rather than market capitalization. (USA Today)

Goldfinger Brown’s £2 billion blunder in the gold bullion market

Stocks vs. Real Estate:
Both real estate and stocks have had their day, but the question you
need answered is this: Which contender is the superior long-term bet
today? (CNN Money)

Why Hot Funds Are Tripping Up Some Investors: In recent months, however, some ETFs have begun diverging widely from
the performance of the benchmarks they are supposed to follow. At the
same time, several newer ETFs with short track records are failing to
match the hypothetical rates of return they would have achieved in
previous years if they had existed then. (free Wall Street Journal)

U.S. Dollar Index Breaks Down   

Mutual fund tax bite at record $24 billion:  Mutual fund investors got slammed by Uncle Sam in 2006. A report by Lipper, a fund research company, found that shareholders in
taxable fund accounts paid at least $23.8 billion in taxes. That figure
reflects the impact on investors who simply held their funds and
reinvested their distributions – those who sold fund shares during the
year would have paid even higher taxes. (CNN Money)

 Uh-oh — I don’t like the sound of this Tax the Middle-Aged! (Slate) 

• Fascinating reading:  All the reporting the WSJ did on the options-backdating scandal ended up winning them a Pulitzer Prize for public service reporting; The Journal moved ALL of their related articles out from behind the sub-only firewall: Pulitzer for Perfect Payday


INTERNATIONAL

Global Markets Driving the Dow: The rest of the world is carrying the U.S. stock market.
Fast-galloping overseas economies, flush world capital markets and a
sagging dollar fatten multinationals’ earnings and furnish the fuel for
commodity-related stocks to surge. (Barron’s) If no Barron’s, go here.

China Selloff II: The Attack of the Giant Jitters: For the second time in less than two months, a drop in
Chinese stock prices rattled markets across Asia and was felt modestly
in Europe and the U.S. Investors said Chinese stocks are becoming a
measure of their tolerance for risk everywhere. The main factor triggering the fall in the Shanghai
Composite Index — it was down 7% at one point Thursday before
finishing with a 4.5% loss — was concern among Chinese investors that
Beijing might move to brake growth in the world’s fourth-biggest
economy with an interest-rate increase. (free Wall Street Journal)

Japan’s Savers May Be Ready to Spend, Fueling Growth: Japan’s penny-pinching savers and earnest salarymen may at
last be ready to loosen their purse strings as bank deposits earn
more and millions of workers collect retirement windfalls.
Economists forecast consumer spending will accelerate this year
as demand awakens in the world’s second-largest economy after a
decade of deflation and stagnant wages. (Bloomberg)

• Overseas investors look at the Shanghai Stock Exchange as a way to gauge the
health of the Chinese economy. They really shouldn’t. Investor Beware (Portfolio)

Many Savers, Few Spenders Leave South China Mall Almost Empty: South
China Mall stands as a symbol of China’s failure to stimulate
more spending by its 1.3 billion people and to curb runaway
investment in real-estate projects. The results: A record $232.5
billion trade gap with the U.S. and increasing concern about
unsustainable growth at home. (Bloomberg


ECONOMY

No Wall. No Worry. No build:

Why This Isn’t Stagflation: For some reason, the word stagflation
keeps creeping back into the lexicon. It really shouldn’t be. As we
have noted for quite some time, we are experiencing a form of "demi-stagflation."  Growth is below the long term trend, inflation is above. Call it stagflation lite or blahflation,  but it is not the 10% inflation, 1% growth of the 1970s. So why are so many concerned about stagflation?

Inflation Confined to Rest-of-the-World, Avoiding U.S.

• The New York Fed hosted a conference on the Euro and the Dollar this week — most of the presentations will soon be online for your econo-geek viewing pleasure

March tax receipts in California came up 7.4% short


HOUSING

Big Drop in LI Luxury Real Estate Prices: Some local regions have already shown drops of 8-12%, according to Zillow.com   

•  Real estate cheerleader concedes price drop: Satan must be shoveling snow out of his driveway, because the underworld has frozen over. By that I mean that the National Association of Realtors has finally conceded that home prices are falling nationwide. (San Diego Union Tribune)

Industrial Real Estate is Booming

How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000?” (San Francisco Gate)

Still Renting: Based on the current outlook for housing, I will likely be renting for one to two more years. While many factors that influence housing prices have turned negative, I suspect we have not yet hit bottom. In fact, housing prices should head lower throughout the rest of this year and next year as well (PIMCO)

How to Sell Your House (CNN Money)
 


SENTIMENT/PSYCHOLOGY

•  Genuinely contrarian: How to tell when "good" news really isn’t — and act accordingly. (Marketwatch)

The hardest trade to make right now? Shorting: Cody Willard had an intriguing post on shorting into strength Friday: (If no RM, then see The Hardest Trade to Make?)

•  Stock Market Psychology: Perspectives

As Dow finds new peak, the doubters are only digging in (Marketwatch)
 


WAR/MEDIA/POLITICS/ENERGY

• Daniel Gross’ satirical Slate column this week compares the various presidential candidates to stocks, complete with Buy Sell and Hold recommendations. Hilarious: Obama Is Google. McCain Is GM

Wall Street Antes Up for 2008: Wall Street ranked as the top source of large campaign donations for presidential candidates in the early part of the 2008 campaign, aided by traditional contributors and new donations from the private-money industry, according to newly released campaign-finance reports. (free WSJ)  see also Pickens’s New Commodity: Giuliani

America’s ‘Seinfeld’ strategy in Iraq: (How did I ever miss this one?  In “The Opposite,” George breaches the most fundamental laws in his universe – for example, the age-old principle that “bald men with no jobs and no money, who live with their parents, don’t approach strange women.” Similarly, in its geopolitical incarnation, adherents to the Costanza doctrine cast aside many of the fundamental tenets they learnt at staff college or graduate school. Let me name a few . . . (Financial Times)

Behind high gas prices: The refinery crunch: Each spring, just before the summer driving season, gasoline prices skyrocket. And every year, these four words appear in news reports nationwide as a big reason for the runup: "lack of refining capacity." (CNN Money)

• A Media Fourfer:

-In a Troubled Time, a New Business Magazine: S. I. Newhouse, chairman of Condé Nast, said in an interview that he had no patience with Portfolio skeptics. “Damn the torpedoes and full speed ahead,” he said. “I don’t think we’re going to trample on Forbes or Fortune. I think we’re going to help the whole field. We’re going to bring excitement to it, and we’re going to bring luxury and fashion advertisers into it.”

-Best-Informed Also View Fake News, Study Says: survey respondents who seemed to know the most about what’s going on — who were able to identify major public figures, for example — were likely to be viewers of fake news programs like Jon Stewart’s “The Daily Show” and “The Colbert Report”; those who knew the least watched network morning news programs, Fox News or local television news.

-Newspapers Lose Readers, Advertisers, Now Analysts: Readers were the first to abandon U.S. newspapers. Then advertisers and investors. Now analysts are joining the exodus

- In case you were wondering who’s to blame for the Virginia Tech massacre, here’s a list of over 50, with the appropriate media attribution    


TECHNOLOGY & SCIENCE

At last, music is the winner: In truth, its radical new online strategy looks more like an act
of desperation than a progressive rethink of DRM. It’s perhaps best
understood as a gallant attempt to kick-start the shiny new vehicle
(online retail) before the wheels fall off the terminally ill one
(CD retail) while hopefully closing the gap on its rivals in the
same cavalier manoeuvre. (The Age) see also: Apple holds upper hand in music negotiations

The Next People’s Car: The $2500 auto from Tata (Forbes)

Microsoft, Adobe Set A Collision Course on Web: Microsoft Corp. and Adobe Inc. are on a collision course as they seek to dominate a new kind of software that will change how personal computers and the Web work together.The companies have been partners in the past, and Adobe is one of the largest makers of software for computers running Microsoft’s Windows operating system. The companies have also tussled before, but they have generally stayed in their corners of the tech arena. (free Wall Street Journal)

What Time is Dinner? The evolution of mealtimes.

•  Big Box Watch tracks new retail construction of several national retailers within the United States. The retailers tracked here all have major expansion plans within the United States, or the opening of a new location will have a significant economic or political impact on the locale community. (Google Maps Mashup via kottke)   

Circuit City, Napster to offer music service (Reuters)

• The Technology, Entertainment, Design conference (TED) has posted all of its presenters speeches online.

Dell brings back XP on home systems:  Amid significant customer demand, the computer maker said on Thursday that it has returned to offering the older Windows version as an option on some of its consumer PCs. Like most computer makers, Dell switched nearly entirely to Vista-based systems following Microsoft’s mainstream launch of the operating system in January. However, the company said its customers have been asking for XP as part of its IdeaStorm project, which asks customers to help the company come up with product ideas. (C/Net)  See also: PC Market Sends Conflicting Signals (free Wall Street Journal)

• Humans are the planet’s best long distance runners: hot, sweaty, natural-born runners.

Pollock’s Fractals: A retrospective of his work several years ago at the Museum of Modern Art in New York City drew lines around the block, and an award-winning film of his life and art was released at the end of 2000. Apparently "Jack the Dripper" captured some aesthetic dimension—some abiding logic in human perception—beyond the scope of his critics. That logic, says physicist and art historian Richard Taylor, lies not in art but in mathematics — specifically, in chaos theory and its offspring, fractal geometry. See also Whatever Happened to… Chaos Theory?  and Random Fractals and the Stock Market

The End of a 1,400-Year-Old Business: What entrepreneurs starting family businesses can learn from the demise of Japanese temple builder Kongo Gumi

• Are you tired of talking to computer phone prompts? Do you want to talk to a human? Try Dial-a-Human!



MUSIC BOOKS MOVIES TV FUN!

• I just added three new books got to my summer reading list this week: Dan Gross’ Pop!: Why Bubbles Are Great For The Economy sounds like just the sort of counterintuitive analysis that makes economics and investing so intriguingly fascinating.

Next up: Todd Buchholz’ New Ideas from Dead CEOs: Lasting Lessons from the Corner Office: I enjoyed Buchholz’ New Ideas from Dead Economists so much that this new book went right on my list.

Given the current state of the greenback, this book couldn’t be any more timely: H. W. Brands’ The Money Men: Capitalism, Democracy, and the Hundred Years’ War over the American Dollar. The money men are the 5 key players in American financial history: Alexander Hamilton, Nicholas Biddle, Jay Cooke, Jay Gould, and J.P. Morgan. The book is as much about history and biography as it is finance.

How NOT To Write A Personal Finance Book

• Music for the Jazz Damaged: A lovely podcast of songs programmed to engage those who are jazz damaged.
Forget interminably long solos or boring improv — these jazz greats feature beautiful melody and gorgeous
musicality.

Neil Young Live at Massey Hall:  I haven’t heard this new CD/DVD yet, but the reviews are great, and the live version of Needle and the Damage Done is outstanding.

A Pardon for Jim Morrison? Gov. Charlie Crist is being asked to pardon the late Jim
Morrison, lead singer of The Doors, 38 years after he was convicted of
exposing himself during a Miami concert. Dave Diamond, a cable TV producer from Dayton, Ohio, wrote to Crist
last month asking for the pardon. Diamond said the goal is to remember
the Melbourne, Fla., native as an artist, not a rock ‘n’ roll bad boy
with a rap sheet.

• Fortune’s Sue Callaway test drives the new $1.4 million-dollar Bugatti Veyron (see the video, also)

Suicide Food Reminds me of cow/waiter/steak in Douglas Adams’  The Restaurant at the End of the Universe, where the food literally speaks for itself.

Is that – might it be — yes, I think it is – its. . .  its . . .  actually sunny out! Wow — what a welcome change. Break out the cigars and gardening tools, Spring is here !

Category: Weblogs

Watching Trading Volume Fade . . .

Category: Investing, Markets, Technical Analysis

Global Markets Driving the Dow

Category: Currency, Economy, Investing, Markets

Friday Nite Jazz: Music for the Jazz Damaged

Category: Digital Media, Friday Night Jazz, Music

Back in Black

Category: Investing, Markets

The Hardest Trade to Make?

Category: Markets, Psychology, Trading

Short Interest (Again) Precludes Correction

Category: Investing, Markets, Psychology, Short Selling, Technical Analysis

Sold to You!

Category: Weblogs

Forbes Video Network

Category: Currency, Economy, Markets, Media

Big Drop in LI Luxury Real Estate Prices

Category: Economy, Psychology, Real Estate