Good Saturday morning. The weather in the NorthEast is stormy, befitting the markets this week. A lot of the themes we have touched upon recently — energy, commodities, inflation, real estate, the Fed — all contributed to the first losing week in five.
The key question that will be debated over the coming week is "normal retracement, or the beginning of the end?" To borrow a phrase from the Fed Chair, we are as "data dependent" as ever.
By now, you know my year end views — I do have short positions in Qs, SPY and have been long the VIX, with a large percentage of cash — but I await more technical confirmation before getting aggressively short. While I do think this Bull market is way long in the tooth, the Transports, Industrials, Materials and Energy sectors have been bright spots. How much longer might that last? I have no idea, but lets see if we can garner a clue from around the web:
• On Tuesday, I explained why Big Cap Tech Continues to Disappoint and must be avoided; Some of you pushed back on that idea, so I illustrated it via a few compelling charts; But the key takeaway from this is the question "Why Guess?"
• Diversification has long been a tenet of investing; Some analysts are suggesting Don’t hedge your bets after all;
• Interesting question from Peter Brimelow: What would happen if there was another LTCM today?
• Slowing housing, increased Globalisation: That’s the new "Conundrum" left to Bernanke by Alan Greenspan. Globalisation is the new shift of power affecting inflation. You can see its impact as increasing commodities prices spook markets;
• Thomas J. Holmes of the Minneapolis Fed has an interesting look at Wal-Mart’s location strategy;
• The cover story in BusinessWeek was on Big Oil; But don’t get your contrarian panties in a bunch just yet;
• Look out Harley Davidson: Is Catepillar now making Motorcycles?
• Two takes on the twin deficits: Dan Gross points to a more satisfying argument re Savings Glut, while John Mauldin wonders Do Trade Deficits Matter?
• Readers of the Apprenticed Investor series know I am a big fan of Behavioral & Neuroeconomics; There’s a fascinating study discussed in Harvard Magazine on the Marketplace of Perceptions; If the entire piece is too long for you short-attention-span-bastards, then just read the sidebar on Neuroeconomics;
• The NSA data mining brouhaha raised an interesting investment related question: Why did Qwest Refuse the N.S.A.’s requests, while Verizon, AT&T and BellSouth rolled over for the belly rub?
• I hate when people abuse markets for political reasons: that’s why
I was annoyed when Stephen Moore Got Slick With the Tax Data;
• New York Mag looks at who are the The Influentials on Wall Street?
• Enrico in Italy sends us this chart comparing the present with 1973-74 cycle; The correlation is about 60% — thats considered high;
• Yale prof Robert Shiller sees U.S. rally cutting out due to housing slowdown;
• Lots of good real estate advice this week: the Real Estate Journal advises Navigating the Web to Find Reliable Housing-Market Data; Meanwhile CNN/Money offers up adive for buyers, sellers and even those staying put: 10 Tips: Beat today’s real estate market;
• The Retirement Calculator;
• When I am in Southern California, I stay with family in La Jolla. I watched this home get constructed just up the cliff from us — not bad for $21.5m; You can’t really tell from the photos, but this bad boy is way up above sea level;
Energy made news everywhere this week:
• "Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." So said Mark Twain, and in that same spirit is my favorite commentary of the week "Why it’s dangerous when Congress "helps." This pro-market screed looks at the idiocy behind the $100 Gas rebate and other congressional follies;
• Interestingly, we see Energy Prices Affecting Consumers Psyches much more than their Spending. David Leonhardt looks at The High Costs of Cheap Gas and Vice Versa; Another thing impacting sentiment: Disposable Personal Income as a % of GDP hit a 25 year low;
• Want to save some dollars on your commute? Autobytel has the dope on Top Ten Smart Deals: Fuel Economy; Surprisingly, this electric car beats a Ferrari in a drag race; If econoboxes don’t interest you, then consider the 750 Horsepower Saleen S7 Twin Turbo (uhhhh, 750bhp . . . mmmmm); Good riddance Hummer H1;
• Plug in your hybrid, pollute less? Not so fast — it depends upon where you live;
• A huge Offshore Wind Farm Plant was approved to be built off the Texas Coast; It will be the biggest of its kind in U.S. On the other side of the planet, Russia Decides It’s Time to Try Modern Oil Drilling, taps Western technology.
• MIT sets up an Energy Research Council and launches a new initiative; Before you shrug this off, I’ll bet you: within 10 years, some groundbreaking, game changing energy technology comes out of this (see ya in 2016);
Technology saw some interesting items away from the markets:
• The WSJ had a "Where Are They Now" look at fallen tech guru George Gilder; I was never a fan of his, and I just found out why: He is an idealogue — a fatal ailment to investors;
• Google continues to roll out new products; I particularly like Google Trends; Paul Kedrosky is considerably less than impressed; Meanwhile, John Dvorak finds a Microsoft malaise: Eight signs that the software giant is dead in the water; Dell’s World Ain’t What It Used to Be;
• The NYT’s David Pogue looks at Why the World Doesn’t Need Hi-Def DVD’s; Manufacturers are battling between two incompatible formats; Like so many things in tech, the Blu-ray, HD-DVD battle will be decided by the porn industry; Whatever benefit this new technology has, its anti-piracy features makes it utterly worthless.
Tons of science news this week:
– Neptune’s moon kidnap puzzle ‘cracked’
– Evolution Gets Hot and Steamy
– One Big Bang, or were there many?
– Jupiter grows another Red Spot (Jr.)
– Spot the fake science: Lesbians’ Brains React Differently vs Britney Spears Reproducing at Unsustainable Rate, Scientists Fear;Since the ongoing response to last week’s political posts were surprisingly benign, here’s a few more items I found unusual:
-Front page WSJ article on the Two-Star Rebel General who is trashing Rumsfeld; (If no WSJ, go here);
–Republicans for Hillary (no, really);
-TDS’ Jon Stewart grills John McCain as he goes into "crazy baseworld;" McCain is charming and humbly self-effacing;
– Treasury Secretary John Snow surprises everybody;
-Dissent looks at why the Democrats have been unable to capitalize on the President’s woes.
-Why did the Justice Department Drop an Investigation into the NSA? Lack of NSA security clearance! (now thats a HOLY SHIT if I ever saw one)
• A physicist looks at a new state of wrongness: The wrongness singularity;
• My pre-FOMC announcement boredom led to this Shakespearan blasphemy: To Pause or not to Pause;
• A fun hack to create a Mont Blanc pen out of spare parts;
• The amount of video prolifierating on the web is astounding:
-See this British documentary on the Dollar and Oil Conspiracies;
-Parkour is a fast growing "sport;" Some of these videos are astounding (warning: giant time suck)
-The terribly amusing Evolution of Dance
– Lastly, John Lennon is revealed as inventor of the iPod! (The BeatleBox)
• Neil Young put his new anti-war album up on his site where you can stream it for free; This summer, he’s touring with CSN (CSN&Y) for the first time in years; (I’ll be at the Jones Beach theater to see them in August)
• A couple of indie albums this week to explore: Several Arrows Later by matt pond PA straddles indie rock and jangly pop: Its not for everybody, but if you like Death Cab For Cutie and the Shins, you may like this. Cloud Cult has been a cult fave for a few years, and their site has a few free mp3s worth checking out;
• Alex Ross, the music critic of The New Yorker, creates an instant century of Classical Music;
• Two interesting books I’m working my way through: the Richest Man in Babylon is one of those books written in 1926 that is still true today. Galileo’s Daughter is a fascinating look at the great Scientist’s most important relationship.
That’s all from NY, where April showers have given way to May showers. I still haven’t seen either Kill Bill — maybe I’ll get a chance this rainy weekend.
