Yesterday, we looked at the week that was. Today, we preview the week to come.
Bond markets are closed on Monday for the Columbus day holiday, but stocks, options and futures markets are all open normal hours.
Its a relatively light week for economic releases: Same Store Sales on Tuesday, along with the September 18 FOMC meeting minutes release. Mortgage Purchase Apps on Wednesday, Import/Export Prices and Jobless Claims Thursday. The most econ-action this week is on Friday: Producer Price Index, Retail Sales, Business Inventories and Consumer Sentiment are released at either 8:30 or 10:00 am ET
Alcoa kicks off Q3 earnings season when they report Tuesday. Costco Wholesale (COST) (Wednesday) and Safeway (SWY) (Thursday) kick off the Retailers quarterly data flow. Based on target’s pre-announcement, expectations have been lowered. Monsanto reports Q4 and full-year earnings Wednesday; PepsiCo reports earnings Thursday.
A few new NYSE listings of note this week: Affinion Group Holdings (AFI) — formerly Cendant’ marketing arm,
begins trading Wednesday, along with Compellent Technologies (CML). Virgin Mobile USA (VM) will follow it
We end the week with General Electric results on Friday. The WSJ notes that this will be "the third time in as many quarters that GE’s earnings will be pinched by housing-market weakness."
Speaking of thirds, perhaps the third times a charm for the TXU deal? iBankers make another attempt at placing $5 billion plus dollars (out of $37+) of TXU’s buyout package.
This week also brings more Fed chatter: Chairman Ben Bernanke speaks at the Dallas Fed Conference Friday; also speechifying: St. Louis Fed President William Poole, and San Francisco Fed President Janet Yellen (Tuesday); Boston Fed President Eric Rosengren (Wednesday); Ms. Yellen, Fed Governor Donald Kohn and Dallas Fed President Richard Fisher (Friday).
Enough preliminaries, let’s get to the main event: Linkfest!
INVESTING & TRADING
• Coming Week: Bull Charge: Can the market keep setting records with banks awash in writedowns? Next week brings more insight into the Fed’s thinking, when the minutes from September’s meeting come out on Tuesday. Federal Reserve Vice Chairman Donald Kohn said in a speech Friday that the Fed did not cut merely to save the markets. He said the Fed seeks to "encourage moderate economic growth over time," and explained that the lagged effect of monetary policy would mean that the impact of September’s easing wouldn’t be felt until mid-2008. (TheStreet.com)
• Seeking Patterns in Corporate Profits: The volatile third quarter is over, but the impact on businesses will become clear only in the next few weeks, as companies report earnings for the period. If the forecasts are accurate, there will not be much to report. Profits for the companies in the Standard & Poor’s 500-stock index are forecast to have grown by about 3 percent from the third quarter last year, based on compilations by Thomson First Call of estimates made by brokerage analysts. That is anemic by historical standards and especially poor relative to the last five years. (New York Times) see also: Subpar Earnings: Companies Blame Housing, Credit Problems for Weakness (WSJ)
• TECHNOLOGY Danger Sign: True Believers Are Getting More Fervent:
THIS CONTINUES TO BE A STUNNING YEAR for technology investors. The
average tech mutual fund is up 19% since the end of 2006, more than
twice the S&P 500’s return. In particular, it’s been a good year
for large-cap, high-growth names: Google (ticker: GOOG), Apple (AAPL),
Research in Motion (RIMM), VMware (VMW) and Amazon.com (AMZN) are all
at or near highs. Not 52-week highs, mind you, all-time highs. And
there are other positive signs. The number of tech conferences is
rising; the recent TechCrunch40 confab, focused on dot-com startups,
attracted more than 1,000 people to a San Francisco hotel. As I
reported on my blog, trade publisher IDG plans to launch a new,
Web-only version of the dead "newsmagazine of the Internet economy,"
The Industry Standard (where I worked for three years during the bubble
days.) Also, it turns out that tech IPOs are hot again; a little
e-mail-marketing company called Constant Contact (CTCT) came out last
week at $16, and by week’s end was hovering close to $30, trading
around 15 times a very generous 2007 revenue estimate. (Barron’s)
• Interesting question at Marketwatch: How 2007 is different from 1987 and how it’s the same: NEW YORK (MarketWatch) — Analysts, including yours truly, love to draw parallels between current market conditions and those of the past. Just this summer, when the Dow Jones Industrial Average topped 14,000 for the first time, I compared 2007 to its 1998 ancestor. Both times, the market dropped, stopped and dropped again for an "official" correction exceeding 10%. But the more we wade through the minefield that is today’s credit crunch the more is written about the last time we saw such problems — 1987. Parallels are also being drawn in politics, the dollar, war and Wall Street itself so this confluence of coincidences may not be such happenstance at all.
• Mr. Market’s Psychology: CALLING DR. FREUD. COME IN DR. FREUD.Mr. Market needs help. For it is a sign of thinly veiled confidence or deep neurosis that the stock rally hinged on Friday’s jobs report.In the good old days of bulls and what must be called bull-malarkey in a family publication (and you have to be over 30 to remember those days), Mr. Market would have — and could have — steamrolled over a jobs report and just about any other data report put together by statisticians and factotums of federal facts.But now, Mr. Market, who is the ultimate expression of the teeming mass of institutional investors, is writhing about like the Rothschilds of old Vienna. Thankfully, the report showed job growth and the articulated groans will be kept to a minimum. (Barron’s online)
• Gold’s time to set price records? Friday’s close in New York, $10.70 above the previous week’s close at $743.10, was the highest monthly close ever. (Gold briefly cleared $800 on an intra-month basis in back in 1980). The ultra-long term $US 5 X 3 Point and Figure chart made available freely by the public-spirited The Privateer Website looks stunningly handsome. (See chart) And after all, gold bugs reason, just about every other commodity price has smashed through to all-time highs recently. Why not gold? (Marketwatch)
• Connections between companies via their Boards: News Visuals
• Going With the Grain(s):
Commodities markets tend to correct extreme over- and undervaluations.
High prices bring forth more supply and ration demand. Consider the
case of corn, which hit a 10-year high of over $4.50 a bushel last
February amid soaring demand for ethanol, which is distilled from corn
in the U.S. As ethanol supplies overtook demand, prices of ethanol have
plunged, dragging corn down more than 20% from their peaks. With wheat
hitting a record of over $9 a bushel, 70% higher than a year ago, what
farmer wouldn’t plant wheat from fence to fence? Much of that rise owed
to a severe drought in Australia, a major wheat exporter. But could a
return to more normal precipitation and a bumper U.S. crop end the bull
markets for wheat and other grains. (Barron’s online)
• Stockcharts ticker cloud: interesting — potentially contrary — indicator. Biggest symbols: QID, EWZ, BIDU, AAPL.
• When Big Deals Go Bad—and Why:
The greatest business successes are often engineered by bold
visionaries who altered industries: Think Microsoft (MSFT), Berkshire
Hathaway (BRKB), and Southwest Airlines (LUV). Unfortunately, when that
type of grand thinking is applied to the mergers-and-acquisitions
arena, disaster often ensues. Multibillion-dollar deals are based on
personal relationships and egos, grandiose plans for so-called
transformational changes to an industry, and a sense that the new sum
will be far greater than all the previous parts. And, of course, the
path for much of the wheeling and dealing is well lubricated by
fee-hunting bankers and lawyers. (BusinessWeek)
• The new and improved Spam Stock Tracker
• Tomorrow’s WallStrip is very, very funny — here’s an early preview: The Value(less) U.S. Dollar
The Wall of worry continues to build:
• Dr. Irwin Kellner of MarketWatch looks at why this could be one of the worst holiday seasons in years: Retail: Blue Christmas
It’s the first week in October, so it must be the start of the
Christmas shopping season. Don’t take my word for it; visit your local
department store or mall. You’ll find holiday decorations have been
hung with care, with the hopes that shoppers soon will be there. Talk
about high hopes. This year’s holiday shopping season figures to
provide all the merriment of a funeral. See also: Wal-Mart
chops toy prices extra early
• Suddenly, It’s All Greenspan, All the Time: For more than 18 years, you could hardly get Alan Greenspan, the former head of the Federal Reserve, to say anything. Now, you can’t shut the guy up. (New York Times)
• What was the impact of the Fed action in August and September?
–Investors to Fed: Thanks for nothing (CNN/Money)
The Fed’s Cut Won’t Spark Inflation (Businessweek)
Regardless, the Fed may find their options narrowing — especially as markets make new highs following the liquidity injections: Trouble ahead for the Fed
• Bear Stearn’s David Malpass leaves the Bulls for the Bear camp: As we all know, contrary (bearish) thinking has its limitations, as the crowd usually outsmarts the remnants. What is significant, though, is when a previously bullish observer turns more cautious — or vice versa. Such was the case this week, as Bear Stearns (BSC) Chief Economist David Malpass grew less bullish on the economy. Malpass has been with the brokerage house for almost 15 years. Prior to his association with the firm, he held a number of economic roles in the Reagan and Bush administrations. (TheStreet.com) see also Do Recessions even matter?
• The new rules of the credit crunch: The Fed may have lowered interest rates, but credit is still getting tighter – and not just for high-risk borrowers. (Money)
• Here’s a new one: Being too broke to sell:
But another factor was at work: Sellers — not buyers — were in
trouble as their closing dates neared. "Our office had four sales in
one week that failed to close because the
seller didn’t have the cash," said the real estate agent, who declined
to be identified because she feared office repercussions. The sellers couldn’t come up with the money? It seems that for those homeowners on the margins — those with some
but not much equity — the costs of a real estate transaction are
turning into a kick in the pants. (Chicago Tribune)
• Homebuilders Liquidate Assets in Desperation Sales:
When D.R. Horton Inc., the second- biggest U.S. homebuilder, couldn’t
sell the one-bedroom condominium in San Diego it listed for $349,800,
the property was auctioned as a last resort for 37 percent less. D.R.
Horton, with annual revenue of about $11 billion, and
Hovnanian Enterprises Inc. now face the worst choice in the
worst residential real estate slump since the 1930s. They’re
selling homes at any price they can get. "It’s desperation time and
some companies may not make
it,” said Alex Barron, an industry analyst at Agency Trading
Group Inc. in Wayzata, Minnesota. "At this point in the housing
cycle, if you have too much debt, it’s hard to get out from
under it.” (Bloomberg)
• But not all is woe in the Housing market: In select areas, the upper tier of homes are still seeing robust sales: $6 Million for the Co-op, Then Start to Renovate: "Even after paying top dollar for a luxury apartment, most buyers see the need for more work . . . often embarking on costly and lengthy renovations intended to reflect not only their own taste but also their ambitions to find a perch in the social and economic swirl of today’s Gilded Age. These newly wealthy are crowding into the market not just to buy the city’s most expensive homes, but to hire its most coveted decorators, surround themselves with dozens of remodeling specialists, and ultimately invite friends and colleagues to see their urban palaces. (New York Times)
• Housing and the Monetary Transmission Mechanism:
Frederic S. Mishkin examines what we know about the role of housing in
the monetary transmission mechanism and then explore the implications
of this knowledge for the conduct of monetary policy. (Federal Reserve)
TECHNOLOGY & SCIENCE
• Fascinating experiment in music pricing: Radiohead is letting their Listeners Determine Download Prices
• Its Creators Call Internet Outdated, Offer Remedies: In 1969, at the Pentagon’s Advanced Research Projects Agency, Larry Roberts oversaw a program of connected research computers called ARPAnet that became the foundation for the Internet. Four decades later, he has spent nearly $340 million trying to redo that same technology, which he now believes is far behind the times. "We can no longer rely on last-generation technology, which has essentially remained unchanged for 40 years, to power Internet performance," says Mr. Roberts, who is 69 years old. Last month, his start-up, Anagran Inc., introduced a piece of gear called the flow router that he says can help modernize the Internet. The equipment analyzes Web traffic to discern whether it is an email, a movie or a phone call and then carves out the bandwidth needed for transmission. (free Wall Street Journal)
• Some good advice for Rupert Murdock: WSJ.com: Free or Paid? (Yes)
• Malcolm Gladwell talks about our working future: If you feel like work is getting harder, it’s not just your imagination, says Malcolm Gladwell. The bestselling author of Blink and The Tipping Point
says the mental demands of the workplace are steadily growing — and
we’re all going to have to smarten up if we want to succeed. "I’m quite prepared for the possibility that the next revolution is
not going to come from a machine," says Mr. Gladwell, 44, a staff
writer for New Yorker magazine, who has carved out his own niche as a
business guru. "It’s going to come from creating a more thoughtful work
force and giving people the opportunity to be thoughtful." (Globe and Mail)
• Creatures of the Deep! (Smithsonian)
• What’s Next In Web Advertising:
Sure, spending on Internet advertising continues to surge. But
maximizing returns on those ads remains a tricky task.Even as new tools
and strategies emerge to help advertisers and Web publishers squeeze
out value, the lack of pricing benchmarks and adequate scale leaves the
online ad market still feeling like a frontier town. (Forbes)
• The Fakebook Generation:
Facebook did not become popular because it was a functional tool —
after all, most college students live in close quarters with the
majority of their Facebook friends and have no need for social
networking. Instead, we log into the Web site because it’s entertaining
to watch a constantly evolving narrative starring the other people in
the library.I’ve always thought of Facebook as online community
• This post is yet another reason why I love the Internet: 13 Step Method For Buying A Car While Controlling The Sale And The Price
MUSIC BOOKS MOVIES TV FUN!
• Last week, we mentioned the new Springsteen album, Magic. While everyone is buzzing about that disc, I want to direct your attention to a band that reminds me a great deal of The Boss of old: The Hold Steady. Great vocals, well written, raucous rock-n-roll.
• So far this season, Curb Your Enthusiasm has been very very funny.
• On the Netflix wish list: Be Kind, Rewind — looks quite amusing.
• Why are so many pop songs based on Classical Music? (Especially Johann Pachelbel’s Canon in D major). "Canon Rock" a Neo-classical metal arrangement of the Pachelbel’s Canon is the 4th most popular video on YouTube, with over 29 million plays.
That’s all from what was a surprisingly fogged in Hamptons beaches. No matter, Fall foliage season will soon be upon us.