Wow! Heckuva week, Brownie!
Markets seemed to have made a bottom — at least for now — as sentiment and technical measures reached extremes typically associated with lows on Tuesday. Indices moved up Wednesday, and then exploded Thursday, in a paroxysm of short covering and rampant buying.
I don’t normally like these explosive moves, as there is that discomfiting tendency towards one day wonders. But the markets had become so washed out, there is a very real chance that this could last — at least a month or so. Time will tell.
Lots of interesting stuff out there — lets fire up the linkmachine, and take a quick ride around the web to see what is worth digesting.
• Did you notice? At a point earlier this week, all the major U.S. indices were briefly in the red Year-to-Date;
• This was a key reversal week, and I felt the markets sketched out a "Tradable Low" on Tuesday (at least for a 4 week or so bounce); Others, notably Dennis Gartman, disagreed: "It is not at all safe to buy stocks . . . not here in the U.S.; not in Europe; not in Asia; not in the emerged nor in the emerging markets. This is a bear market and we must understand that; weakness is not to be bought; strength is to sold into." (and people say I’m Bearish).
• Markets sold off two weeks ago on good news (Zarqawi’s death), and rallied this past week on bad new (CPI/PPI inflation data). It was a brief reminder why you should Lose the News;
• Good series at Marketwatch on Shortselling:
• Slate’s Dan Gross asks Why are so many companies purchasing their own shares? The answer is rather suspicious.
• What does Extreme Volatility mean?
• A good stock screener/power searcher from MSN Money;
Its Inflation time, and boy, do we have a lot of stuff for you on this one:
-CNBC’s Steve Liesman was a guest blogger on Monday in How the Fed Chief Gains Credibility;
-Barron’s explains Why Bernanke Is Dead Right on inflation; Fed Watch at economist’s view: Ascendancy of the Hawks; There goes the core! More businesses seek to recoup losses by sharing pain of higher costs with consumers; Irwin Kellener, does not, unfortunately, understand the "cruelest tax"; Fed Governor Randall Kroszner asks Why Are Yield Curves So Flat and Long Rates So Low Globally?; The Philly Fed has a research report on Core Inflation as a Predictor of Total Inflation (I think its crap).
- Rents in U.S. rise at fastest pace in 5 years http://www.azcentral.com/news/articles/0614rents-surge14-ON.html
You know it was a busy week if we are this far along and haven’t yet mentioned Real Estate:
-It turns out that Housing Leads the Economy Up AND Down; Also, the Net Worth of American Households have been unusually dependent on Real Estate the past few years; Amazingly, 30-Year Conventional Mortgage Rates are still historically cheap.
-A new study looks at where housing markets are overvalued; CNNmoney calls it Housing boom 2.0; Bloomberg looks at Where the Riskiest Local U.S. Home Markets are;
-Don’t hand your house to a thief — beware of sleazy mortgage deals;
-The battle between Full-Service Realtor Brokers’ and their Discount Rivals is hurting Consumers (WSJ)
Only a few noteworthy energy/geopolitical items this week;
-Are we at the Last Exit for Diplomacy with Iran?
• Okay, say you have a $300 PC, and you don’t want to spend big bucks on software: here are Free Ways to Do Desktop Work on the Web;
• Alex, I’ll take vaporware for $100: Microsoft said to be developing iPod rival;
On to the fun stuff!
• Three books arrived this week, amd they are all consigned to the queue: O’Shaunessey’s Predicting the Markets of Tomorrow; Greenblatt’s You Can Be a Stock Market Genius; Louise Yamada’s Market Magic;
• Glide magazine suggests 25 New Songs to Download Right Now;
• This is the world’s most important 6-sec drum loop;
• Noah sends this along, and says it may very well be the best 12 minutes you’ll spend today: Freebird (Live at Oakland);
• Try not to enjoy these music videos too much: The pinheads at the RIAA is seeking to once again thwart innovation: Death by DMCA
• And my very favorite blog entry of the week: Cody Willard is My Type
Several reader’s ask how I put together the linkfest. No can do today, as I am beach bound, but perhpas in the coming weeks I can answer that question.
Have a good weekend!
"AS WE WERE SAYING BEFORE WE WERE SO rudely interrupted by a man dressed in a white smock and wielding a scalpel (thank heavens he left his box-cutter at home), the stock market looks a bit worse for the wear."
So says Barron’s Alan Abelson, usually one of Wall Street’s most visible Bears. Just his luck — or was it the Trading Gods having some fun? — that he managed to be out of service for the most bearish period in 3 years. Traders, being a superstitious lot, will soon be begging Abelson to "let us know the next time you go in for a procedure" – so they can get short.
Regardless, whatever the man dressed in a white smock removed, it wasn’t his arch sense of humor or acid tinged tongue:
"The impact of the massive disturbance was global in every sense: Not only were its terrible tremors felt far beyond the narrow canyon of capitalism in lower Manhattan, but they commanded notice in quarters much loftier than trading floors or commodity pits. We’ve not the slightest doubt, for example, that what prompted the famed cosmologist Stephen Hawking early last week to urge earthlings to create settlements in space was, pure and simple, fear of the effect of crashing markets on the human race."
But the key to Abelson’s return is his clear eyed take on inflation, which comports squarely with our own views:
"FOR OPENERS, OUR HUNCH IS THAT MR. BERNANKE’S concerns about inflation, despite his mucking up the message with all that rubbish about inflationary expectations, have more than a modicum of merit. And our conviction on this score is only strengthened, of course, by the fact that so many pundits pooh-pooh inflation as a problem. Indeed, if anything, we fault the chairman for his evident sympathy with the argument that the fearsome upward spiral in the price of crude, so far, anyway, hasn’t been exerting all that much impact in the economy at large.
Apparently, Mr. Bernanke, like his critics, needs to get out more. Oil is a very sneaky commodity. Our old friend and revered Barron’s contributor, Abe Briloff, likes to describe certain stealth accounting practices as comparable to a bikini: what they reveal is interesting, what they conceal is vital. Oil is something like that: Its uses are readily manifest, but it plays a far bigger and more critical role in our lives than is easily perceived.