Where to begin this week? Markets got off to a rocky start, found their footing, and never looked back. Commodities plunged, with Crude Oil reaching a 19 month low, falling 6% for the week, down 13% YTD. Retail Sales were robust, up a seasonally adjusted 0.9%, above consensus of 0.7%.
The Industrials gained 1.3%, while the S&P500 tacked on 1.5%, but it was the tech-heavy Nasdaqwhere the real action was: After lagging in 2006, the Tech index led the way (if we ignore a few late week profit warnings from big names), with the Comp jumping 2.8%. Meanwhile Apple excited geeks and investors alike.
Jeez, another 3 day weekend? Ok, let’s set up em up for your clicking pleasure:
INVESTING & TRADING
•One of the more intriguing things about pulling the fest together each week is how clearly the two sides have hardened in their views — I cannot recall the last time consensus was so split:
– Goldilocks still defies the bears: Investment managers do not generally believe in fairy tales, but
there is one that dominated all discussion as 2007 began. Unless a lot
of investors are wrong, Goldilocks is alive and well and impervious to
the bears who believe the US and world economies are on their way down.
– What if bulls are wrong about 2007? Contrarian forecasts global recession and market meltdown
– Too Hot, Too Cold — or Just Right?: a fair number of panelists don’t expect the
party to end this year. The sort-of-consensus view: U.S. stocks will
rally "not much" to 8%-10% in ’07, dividends included, though some see
a violent shake-up along the way. Bonds won’t be terribly interesting,
and the dollar will continue to struggle.
– Danger ahead? Stocks’ early warning signal: According to the Stock Trader’s Almanac, how the S&P 500 performs in the first five sessions of the year can be an indicator of how it will perform for the full year.
– Already in ’07, There Are Signs the Conventional Wisdom Is Off
• World’s Assets Hit Record Value Of $140 Trillion — fascinating chart, too
• Cramer takes alot of grief from detractors (most of it unjustified), so when he utterly, precisely, and undeniably nails something, he deserves credit for it: 1/10/2007 9:30 AM EST Memo to the bulls: "this is what you have been waiting for: a DOWN opening. This is the opposite of the first day of the year. It is a godsend. YOU MUST BUY THIS DOWN OPENING" He couldn’t have been more right.
• As Oil Falls, the Dow Becomes a Gusher (Barron’s)
• How Wall Street ‘Sweeps’ the Cash Gee, go figure Wall Street firms have figured out yet another way to snake some coin from their clients. . .
• Marc Faber Says Global Assets Markets Face `Severe Correction’ Faber talks with
Bloomberg about the outlook for the U.S.
economy, the dollar, commodity and stock prices and his investment
strategy. (See also: Video)
• John Dorfman on why Under followed stocks outperform: Wall Street Analysts Stumble on 2006 Stock Tips (I wonder if this is merely a function of market cap size)
• The bull market has at least a little further to run, according to the contrarian view.
• Trader Interviews: just what it says: Interviews with various traders
What Wall of Worry?
• Art Laffer on the Yield Curve: He says "Its different this time"
• Is the ‘Growth Recession’ Ending: Incoming data suggest a stronger pace of economic
activity than thought likely a month ago, leading Morgan Stanley raise GDP estimates. Also, Harris of Lehman Expects 2.5%-3% U.S. Growth in First Quarter (video)
• Old Economy Rules Need Modernizing: Some economists talk
about the U.S. economy as if it were still 1890. Their old-economy concerns seem to have little relevance
to today’s new economy.
• Anyone notice how the banks and credit unions across the country have
increased their interest rates on bank deposits? You can get 5.5% to 6%
now on 1 to 3 year maturities. What is it that Banks know that all these analysts don’t? (See also: Banks’ Cry: ‘Give Us Your Cash!’)
• Fortune’s Best Company to Work For 2007; Guess what firm grabbed the top slot?
• Study says tax cuts aid richest-report: The 2001 and 2003 tax cuts offered the biggest benefits to families
in the highest income categories, according to a citing a Congressional study by the nonpartisan Congressional Budget Office study. Families earning more than $1 million a year saw their federal tax rates drop more sharply than any other group.
• What are the jobs Americans won’t do? Dirty Work
Real Estate remains the most vulnerable sector of the economy, and the data flow continues to be bleak:
• The National Association of Realtors sees Home Prices Rising in ’07; I figure they are suffering from blunt head trauma. (no, really — they are tripping). As if on cue, 3 home builders announce record setting cancellations of sales.
• File this one under Holy Snikes! California Company Announces No Mortgage Payment for 12 Months
• Fascinating study by a Wellesley College prof on Buyers vs. Sellers: It paints a picture of a market nearing a standstill, where would-be sellers take their homes off the market rather than accept markdowns. Over such a lengthy period, even in a slow market, 70% of these homes should have sold. But theonly 30% moved in the current market: The Standoff could lead to recession
• Foreclosures increase 51 percent nationwide — but they are still not at a record level yet.
• Through a Glass, Darkly: How Data Revisions Complicate Monetary Policy
• Thanks, Goldie! GSCI Cuts Energy Exposure (Again) Note that the last time they did this, the markets lit up from July til December;
• FRIEDMAN on Green Coal
• Lots about Iraq:
– Murtha Outlines StrategyTo Restrict Troop Surge (WSJ free)
– Same Old Fatal Mistakes on Iraq (Bloomberg)
• Our approach to fighting terrorism is pathetically inadequate: Make Them Fight All of Us
• Doomsday clock ticks; Nuke programs push world to ‘perilous period’
Technology & Science
In case you somehow missed it, Apple introduced a new mobile phone. Long story short: Its Drool Worthy.
There’s a lot of other coverage on it, but here are some of the more interesting items you may have missed:
–What the iPhone Means for Everyone from Cellular providers to chip makers to handset competitors
-Steven Jobs: iGenius
-Good comparison of various smart phones: The iPhone is here
– Why use Cicso’s Trademarked name iPhone if you know it will invite litigation? Free publicity (also, expect 3G speed eventually)
– full iPhone round-up about all the rest
• Oh, and uh, CES was this week. The WSJ blogged it.
• Duo Envisions Merging Best of TV, Web: KaZaA and Skype’s founders are backing a video start-up that promises to let users watch broadcast-quality movies and TV shows on their PC
• Gartner: Vista still not ‘done’
• The Snoop Next Door: Bad parking, loud talking — no transgression is too trivial to document online. WSJ reporters on new Web sites for outing fellow citizens.
Music Books Movies TV Fun!
• I just love the name of this band: Ferocious Bubbles.
• Stephen Colbert and Bill O’Reilly will appear on each other’s respective shows on Thursday, January 18;
• The missus is finally reading a book I gave her years ago, and is loving it: The Time Traveler’s Wife
• Nice roundup of the Detroit Auto Show via the NYT
• New Yorker’s film critic Davd Denby’s take on the present and future of movies: Hollywood looks for a future
• Time lapse of Pablo Picasso painting in oils, allowing us to see his creative process at work.
Enjoy the extra day’s rest!