One-Two-K linkfest!

The Melt-up continues. The market is on fire, and it looks like nothing can or will stop it. Nuts with Nukes! Weak Earnings! Mixed Economic Data! Hawkish Fed talk! None of it matters, as this is a runaway train, and woe be he who steps on the tracks in front of it. The usually circumspect Mike Santoli called it a  "Get-Me-In-Now" Market.

Forget Y2k . . . The Dow is now in one-two-k (12k) territory.

And funny thing is, the Dow was the laggard this week, gaining less than a 1%. The SPX tacked on 1.2% for the week, tagging 1,365 — a five-year high. Nazzy was the star, up 2.5% to 2357. Both the Dow and the S&P are now over their May highs, with the October option expiry coming up this week.   

Are you Long? Short? In cash? All three? Well, none of that matters right now. Warm up your mouse hand, and get clicking — Its weekend linkfest time!

INVESTING

• Barron’s Alan Abelson calls this "One of Those Aberrational Stock Markets" (if no Barrons, go here)

• Oh yeah? Shut Up, and Run With the Bulls

• Bernie Shaeffer is looking for another 15% on the S&P500 from here

• Gee, where did all the Bears go? (And why do the Bulls seem so insecure?)

Insurer Earnings Are Soaring

• Two terrific discussions on the future of China: The Great Chinese Profits Debate and Is China Growing at the United States’ Expense?; (see also China Quarterly Update pdf)

• Fascinating question:  When Does the Fed Cut With the Dow at or near Record Highs?

• Raymond James Jeff Saut asks: How Cheap is the Dow?

• The HP story gets messier and messier. Somehow, I doubt credit for the turnaround goes to the prior CEO: Carly Fiorina’s Revisionist Chronicles   

• Earnings have been less than wonderful — thought they are still on track for double digit year-over-year gains.   

Weak Results Dim Hedge Funds’ Luster — My suspicions are that alpha chasing hedgies are a large part of this recent move;


ECONOMY

• How much does housing wealth boost consumer spending? (The surprising answer: more than twice stock market wealth)

• Robert Rubin on America’s "Deficit Disorder"

• Retail Sales Ask: "What Soft Landing?"

• Fed rethinks view of housing-led slowdown

The Absurdly Large BLS Revisions, part II

Bankers saw it coming

Check out the total lack of agreement in the following reports:

-Fed Beige Book Says Retail Sales, Services Demand Picking Up
-U.S. Growth Near`Stall Speed’ Raises Recession Risk
-Conflicting Signals—Best Third Quarter in Years
-Chip sector expected to issue lackluster reports
-Fed Reports Resilience in Economy
-Job Losses May Turn Housing Slump Into a Rout
-Services  — the largest sector of the US economy — is now growing at the slowest pace in 3 years

Goldman Lowers GDP and Interest-Rate Forecasts


HOUSING

• Interview with Kenneth Heebner, on Surviving a Real-Estate Slowdown;  Since 1994, Heebner has managed the $1.2 billion CGM Realty Fund. It has the best 10-year record of all real-estate-focused mutual funds, according to fund tracker Lipper Inc. So it may be worthwhile to hear what Mr. H has to say.

• Seeing Something to Cheer in a Big but Stabilizing Inventory of Homes   

• Dallas Fed says "Drag from Residential Real Estate could get much worse."

Guest Blogger Stephen Colbert on Housing

• Investors Struggle With Aftermath Of Condo-Investing Fever 

ARMs Control for Borrowers ($)

• Don’t say you weren’t warned: Prices in 100 U.S. Cities Expected To Decline for Next Few Years; Of course, if mortgage rates plummet further, that may not happen. See also: Where Home Prices Are Falling, Rising or Just Staying the Same

Tom Toles amusing take on Housing

• The good news:  For homeowners who have been putting off
remodeling projects, now may be the time to get started. Sluggish
home-building demand is pushing down the cost of construction materials
and spurring remodelers and other professionals to take on smaller
projects — and sometimes cut fees.


Energy & Commodities

An Oil Baron Not Afraid to Be Candid

Which Way Is Gold Heading?

How Long Will The Commodities Shakeout Last?

• A close up look at commodity traders:  Pit Bulls


Politics Media Military

I rarely link to Time magazine (a matter of interest, not politics) but this week, they have lots of really interesting stuff:

A Marine’s ‘Letter from Iraq’ moved quickly beyond the small group of acquantainces and hit the inboxes of retired generals, officers in the Pentagon, and staffers on Capitol Hill. Regardless of your views of the war, you cannot read this without feeling proud of our military, working under trying circumstances and still doing their level best.   

•  Curious as to what Economists think the battle for the House (and less likely, Senate) will mean to the economy and to the markets? (select "
Election Impact")

• Ever since America’s decisive military victory — and it was originally a decisive military victory — Iraq has been nothing but trouble. TIME magazine reports on the errors and bad guesses, before and after the war, that got the Bush Administration into this spot.

• This Lancet Study is sure to generate pushback:  Iraqi Death Toll Exceeds 600,000,Study Estimates

• Time magazine on the End of the GOP Revolution; I actually thought they top ticked it last year when — for no discernable reason — they put the shrill blond harpy on the mag cover.

A Revolt of the Generals?

Trow da bums out? Tradesports gives the GOP only a 33% chance of retaining control of the House. (Last Price: 33.1), down big from lst week’s 40% odds; GOP control of Senate remains over 70% (Last Price:
70.6).

The market must think divided government is good.


Technology & Science

Google is slowly moving into Apple’s position as the dominant news story, on 100s of unrelated items. I wasn’t trying to spotlight them, but note how many Google items are sprinkled here:

•  Google’s Free Web Services Will Vie With Microsoft Office (Docs & Spreadsheets)

• An example of this new web based collaborative technology would be this real estate agent’s  Buy Versus Rent Spreadsheet. Think about how many fabulous apps Google maps open API has spawned; Now apply that to spreadsheets. The possibilities are practically  endless;

Way cool: The MIT computer assisted sketch simulator (Really drives home the meaning of going back to the drawing board . . .)

• James Altucher inspired me: Blogger Spotlight

•  11 Companies that are changing the world

• Distant Planet is Half Fire, Half Ice

Why Apple Will Change TV

• Go ahead, call it: 877-GOOG-411

• Who knew?  Exploding Stars Influence Climate Of Earth

• Forbes goes YouTube crazy: The YouTube Revolution

Is Windows Near End of Its Run?  an interview with Steven A. Ballmer, CEO of
Microsoft

• Apple & U2 paint the iPod red 



Music Books Movies TV Fun!

Question: Is Borat funniest movie ever…or just the most offensive?   

•  Peter Gabriel has been opening his tracks up to fans, and holding a remix contest. The results are pretty interesting

Dude, Where’s My Film?

• There are few De Niro movies — in fact, few movies period — funnier than Midnight Run;

• I greatly enjoyed both The Tipping Point and Blink (the former much more than the latter), but I came away with the impression that these were interesting magazine articles  s t r e t c h e d  a little to be full books. Apparently, there are other far harsher critics: The NY Observer on Passing the Gladwell Point;

• Following Paul Kedrosky’s advice, I just received the lovely Index Funds: The 12-Step Program for Active Investors. It is so lavishly illustrated, it is practically a cocktail table book.

• NBC is running online-only "webisodes"  of The Office (deleted scenes here)• DOT: Dangerous Intersection Causing Some Pretty Cool Accidents

• This close to an election, and Jib Jab is surprisingly silent;

• Ever wonder what happens when you dump a bucket of liquid nitrogen into a swimming pool?

• Guiness World Record for most T-Shirts worn at one time

That’s all from the gloriously sunny NorthEast, where on the breezy north shore of Oyster Bay, the OysterFest beckons. Time to get shucking!

Category: Weblogs

Dilbert’s Unified Theory of Everything Financial’

Category: Investing, Psychology

Where are the Bears (And why are the Bulls so insecure?)

Category: Investing, Markets, Psychology

Barron’s: One of Those Aberrational Stock Markets

Category: Investing, Markets, Psychology

Barron’s: 3 out of 4 weeks in Abelson’s Column

Category: Media

Relentlessly Bearish Fashion

Category: Intellectual Property

Blog Measures?

Category: Weblogs

Retail Sales Ask: “What Soft Landing?”

Category: Data Analysis, Economy, Markets, Retail

Earnings & Reactions: CostCo versus Alcoa

Category: Earnings

Blog Spotlight: Capital Spectator

Another edition of our new series:  Blog Spotlight.

We put together a short list of excellent but somewhat overlooked
blog that deserves a greater audience. Expect to see a post from a
different featured blogger here every Tuesday and Thursday evening,
around 7pm.

Next up in our Blogger Spotlight:  James Picerno is the editor of The Capital Spectator (capitalspectator.com), a blog focused on economics and investment
strategy. He is also a senior writer for Wealth Manager, a trade
magazine for financial advisers to wealthy individuals. He has been a
financial journalist since the late-1980s.

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Capitalspectator

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Today’s focus commentary looks at:

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TIMING & MAGNITUDE

The head of the self-proclaimed "authority on bonds" says the rate hikes are history. PIMCO’s Bill Gross wrote in his October Investment Outlook that "the Fed is done and ultimately will have to lower interest rates in order to restimulate an asset based/housing led economy that has been its primary growth hormone in recent years."

The underlying assumption in his projection is that inflation is "leveling off" and the economic growth rate is "moving towards a 2% real growth rate or less in the next year or so…." As such, the Fed "at some point in 2007 will be forced to cut short rates." Timing and magnitude are yet to be determined, he adds.

In fact, the future may be more complicated than it appears. Economist Robert Dieli of NoSpinForecast.com documents the finer points of this complexity by plotting the history of economic cycles against instances of inverted yield curves. As he illustrates in the chart below (which, alas, we’ve squeezed a bit from the original to fit into the confines of CS), there’s a lengthy history of yield-curve inversions accompanying economic contractions and a drop in the Fed funds rate shortly after the yield inversions arrived. But that doesn’t mean the past is prologue, at least not a prologue that’s clear and obvious.

 

Read More

Category: Blog Spotlight