Another week, another milestone: The Dow did in fact close over 12,000, thanks in part to big numbers from IBM, and stayed that way despite Caterpillar’s 15% whackage Friday. The Dow finished the week at 12,002, up 41 points, the S&P500 was flatish, and the Nasdaq fell 14 points.
News flow was heavy, with earnings, geopolitics and economics dominating. We are still on track to do between 14-16% year-over-year gains in the S&P500, although The Trader column in Barron’s notes this is over the "Katrina quarter" of last year.
While the Bulls will point to some spectacular earnings — Google and Apple in particular — the Bears can take solace in quite a few blowups: In addition to the aforementioned Cat (and previously mentioned Alcoa), the Financials have been somewhat punk, in both deed and word. Future guidance has been rather dour from the banking crew, in contrast with strength from the Brokers. In techland, Software continues to dramatically outperform Chips. Xilinx (XLNX) impressed, Intel met numbers, AMD and Sandisk didn’t and got slaughtered. HP and Intel are slashing headcount, atypical if this is really so robust an economy. Other disappointments: Yahoo, Motorola, Nokia, WaMu. (We won’t even mention the Homebuilders)
No matter: this week will be quite heavy with earnings, and them Central Bankers will get together for a 2 day chat over tea and interest rates. Later in the week, we get Home Sales, Durable Goods, GDP and Consumer Sentiment.
None of that matters now — its the festival of links!
• What does it take to be a great investor? Research now shows that the lack of natural talent is irrelevant to great success. The secret? Painful and demanding practice and hard work. Another news flash: Diet and exercise secret to weight loss.
• Crestmont Research checks out the data on Bull and Bear markets
• Uh-Oh: Golden State Warriors rename the arena in Oakland "the Oracle" after striking a 10 year deal with Larry Ellison’s software firm. I’ve been bullish on Oracle since the summer, but as we have seen in the past, arena naming deals have been disastrous for stocks.
• Even I get selectively Bullish occasionally: In addition to Oracle, I gave the nod to IBM on Power Lunch prior to their earnings (worked out well). And on the WSJ Report this Sunday (NBC & CNBC), we discuss those two stocks, plus Google and Apple, Safeway and Cambells Soup, along with a slew of overseas ETFs. (Coolest part of WSJ Report: your name shows up on TiVo!)
• Despite $30 coming off a barrel of Oil, the transports look awful
• Lure of China triggers the world’s biggest IPO
• His Asso is Grasso roundup: Judge Says: It’s Payback Time . . . Oh, and make that about 100 large — as in $100-Million NYSE Payback. Floyd Norris says Grasso never really understood why his extraordinary compensation was outrageous, and, Marketwatch claims the Grasso decision is "a blow to big executive pay" (I doubt it); Cramer notes Spitzer won huge.
• the new breed of high flyers: Soldier of fortunes
• The "Morningstar Investor Return" — a measure of dollar-weighted return — is a bettter tool for Fund investors than 1, 3 & 5 year returns
The Wall of worry continues to build:
• Volcker Says Inflation May Accelerate, Become Harder to Contain
• Darn numbers! Slowing or hard landing, recession or acceleration?
• Caroline Baum says "Bye-Bye" to the Bond Vigilantes (assuming they ever existed in the first place)
• The merger between the Chicago Mercantile Exchange and the Chicago Board of Trade will create one of the world’s largest financial markets: A critical look at An 8,000-Pound Gorilla, With Little
• Forbes takes a very cool look at The Average American: 1967 And Today
• Interesting Analysis on the economics of Auto Leasing: Does Detroit Get it Right This Time? (yes)
• Wal-Mart expand $4 generic drugs to 15 States, thus raising more questions over the future of generic drug pricing.
• Can Ray Ozzie Rebuild Microsoft?
What will the Fed do this week? Historically, they tend not to raise rates 2 weeks prior to elections. However, here’s what some others think:
• Beware: More Fed hikes may be coming
• With all this ambiguity, lets go right to the horses mouth: Fed’s Poole Sees Equal Chance Interest Rates Will Rise or Fall (uh, thanks for clarifying that)
• I always find some interesting charts in the St. Louis Fed’s monthly Monetary Trends
• Dont make me laugh: Stabilization in housing? puh-leeze.
• In Naples, Florida, an experiment is taking place: auctioneers will be selling about 50 prime properties. As you can imagine, Realtors are fuming over property auction; Elsewhere in Florida, Investors Struggle With Aftermath Of Condo-Investing Fever;
• Some overextended homebuilders are finding half unsold developments due to are creating ‘ghost towns’
• This is simply hard to beleive: Lenders Loosen Standards Even as More Loans Go Sour
Energy & Commodities
• I really enjoyed this piece: Ten Innovations That Will Reduce The Amount of Energy We Use; There were a few related items this week: GM, Goldman Sachs, Whole Foods all use solar power in Sunny Side Up; The big solar story was that Google is Converting its HQ to Solar Power;
• Can BP bounce back? (yes)
• Now that he’s safely esconced back in Academia, Prof Greg Mankiw, former Chair of the President’s Council of Economic Advisors, says Let’s Raise the Gas Tax. I give the Harvard prof no credit, finding his voice AFTER leaving a place where he could have done something. (My solution? A Federal Gasoline tax at a nickel — and it goes up 5 cents a year for 10 years, with the proceeds earmarked for alternative energy research — Like California’s proposition 87). I am in Tom Friedman’s camp, believing energy independence is a National Security issue.
• And in case you think we are not in competition on this: China begins to Fill 2nd Oil Reserve
Politics Media Military
• That whole underground Nuclear testing? Um, sorry old bean, our bad: N. Korea apologizes for nuke test (Gee, think China had anything to do with that?) And in the ironic but true department, The Onion had the best take on this issue: N. Korea Detonates 40 Years Of GDP.
• Trow da bums out, part 2? Tradesports some changes: up almost 2 points GOP has a 34.8% chance of retaining control of the House; GOP odds were down fractionally for retaining control of Senate remains at 70% even.
• The few from Down Under is that a Tidal wave of discontent marks turning point for US; Closer to home, Barron’s says the GOP will hold on — based on a district by district analysis of campaign contributions; My best guess? Barring an
‘October Surprise’, this could be the largest political realignment in a decade — and it could have very real consequences for equities.
• Speaking of which: October Surprise for the Investor Class?
• The Weekly Standard occasionally surprises: See Censoring Iraq: Why are there so few reporters with American troops in combat? (Don’t blame the media)
Technology & Science
• The complete works of Charles Darwin go online
• After weeks of mostly positive buzz about You Tube, the backlash has begun: Japan’s copyright holders have forced YouTube to Delete Nearly 30,000 Files; and, YouTube shared user data with studio lawyers Forrester Research goes a step further, comparing YouTube to Napster.
• The key difference this go round? Three of the four major music
companies — Vivendi’s Universal Music Group, Sony and Bertelsmann’s
jointly owned Sony BMG Music Entertainment, and the Warner Music Group
— each quietly negotiated to take small stakes in YouTube as part of video- and music-licensing deals they struck shortly before the sale
• Awesome couple of Space photos: The Hubble captures galaxies colliding;" this image, taken in Normandy by French astrophotographer Thierry Legault, captures what "looks like a speck of dust on the surface of the sun. But this spectacular picture shows the space shuttle Atlantis alongside the International Space Station (ISS) silhouetted as they orbit the earth." Way, way cool.
• Ha! Like that will happen anytime soon: Gartner says Macs should be made by Dell; Also in Dell news: We’re # 2! (oops); Lastly, Apple files iPhone trademark and Prudential says Apple will release two iPhone models, one with WiFi;
• The number of actual inventions foreseen by Science fiction writers adds another notch to its belt: Working invisibility cloak created
• A Microsoft blogger on all the Features that didn’t make the cut into the final version of Windows Vista
• New Study: Early TV Viewing Might Cause Autism
• who wrote this junk? A Brief History of Computers, As Seen in Old TV Ads
Music Books Movies TV Fun!
• What if you built a machine to predict hit songs and movies?
• The Daily Show correspondent John Hodgman — perhaps best known for his hilarious portrayals of a PC in Apple’s commercials — has a new book out garnering tremendous reviews: The Areas of My Expertise
• If you are a Beatles fan, you will very much like a Vaughn Trapp: his terrific first release pays homage to their musical influence,
sprinkling melodic and stylistic references, yet remains fresh and
original in its own right.
• Chris Botti’s To Love Again is a serene collection of duets between the Trumpet player and the likes of Sting, Paula Cole, Renee Olstead and SteveTyler
• Roman Holiday is as charming today as it was in 1953;
• I’m sure you were dying to know: Real-Life Salaries of Popular TV Characters (Homer Simpson makes what?)
• The secrets of Stonehenge revealed: Moving pillars weighing 22,000 lbs using only gravity and ingenuity (this is very very cool)
• Classic! Monty Python Halo mash up
That’s all from the gloriously sunny NorthEast (2nd weekend in a row), where I am taking the top down, and cruising the rest of the weekend along the Sound.