Another week, another collection of mayhem: From the Fed pause to the not-so-friendly skys, indices lost between 1-1.5% this week, as investors digested lots of news this week.
Surprisingly, the airports were not nearly as problematic as you might have suspected: I flew out of JFK the day the thwarted terror plot was announced; Aside from having to move all of our liquids to our carry on bags — which we then checked — getting thru security was fairly easy, and our flight to Denver departed on time (go figure).
Speaking of which, Vail is gorgeous during the summer, with sunny 85 degree days and delightful 75 degree evenings. And as long as the lodge has fast internet access, I can get you the weekend linkfest:
• The long awaited, very telegraphed, highly anticipated Fed pause took place this week — and markets sold off afterwards.
It was, as they say, already baked into the cake. Some felt Despite investors’ sentiment, a rate increase would be good. I was in the camp that thought a 1/4 hike and accompanying dovish statement would have been good for the markets; Instead, we got a Dovish Pause; Then came Friday’s surprisingly robust Retail numbers — the largest since January — and investors began contemplating the definitional differences between the words "Pause" and "Stop."
After the Fed meeting, we looked at most of the research on what happens When the Fed Stops Tightening (of course, we dont know yet if they are actually finished);
Back in April, I warned readers that the Pause/Resume Scenario Was Increasingly Likely; This scenario would be the worst of both worlds — an official acknowledgment of a slowing economy AND an admission that inflation is too strong. The concern now returns to fearing another hike, and wondering What if the Fed’s reasoning is off?
• The US airport security is moving more towards the El-Al model: Aircraft-Security Focus Swings to People (from weapons); Before the Airline Terror plot was thwarted by UK undercover agents, CATO was asking if we have been lulled into a False Sense of Insecurity?; Hezbollywood? In Lebanon, Evidence mounts that Qana collapse and deaths were staged;
• Inflation remains an issue. Dan Gross looks at The Rising Cost of Living Well; Meanwhile, Stagflation is The comeback kid. Oh, and have a look at the graphics at The Changing Dollar; Lastly, Gas Costs Eat Into Restaurant Sales;
• Look who’s caught up to reality: The economists who participate in the WSJ’s Monthly Economic Forecasting Survey (If no WSJ, go here);
• What are the odds of an economic meltdown? Depends upon who you ask:
– 30% chance of recession sometime in the next year (Berkely’s Brad DeLong)
– 30% chance based upon the Yield Curve Inversion (According to this 1996 Fed paper)
– 40% chance (according to the Estrella/Mishkin model, if
the yield curve inversion were to reach 50 basis points)
– Less than 50 percent (Waddell & Reed)
– 50% to 70%, due to "Investors’ Fairy Tales" (NYU’s Nouriel Roubini)
• Its not all gloom: In Silicon Valley, Job Market Heats Up;
I believe Housing continues to be the key to the Slow Motion Slowdown.
• One of the bigger issues are APRs: Strapped Homeowners Start To Feel the Pain of Rising Rates; Just be glad you don’t own one of The Houses That Wouldn’t Move;
• Are Economists Too Optimistic on Housing’s Soft Landing?
• Ohio and California
mortgages have seen default notices soar, and yes, foreclosures are on
the rise — but they are still far below historical peaks.
Lots of Investing news this week:
• The Stock Scouter loves utilities
• Trannies Begin New Leg Down (We’ve mentioned this a few times this year)
• Good warning signal: Five phrases that signal a fund manager is covering up; You shouldn’t hesitate to cut loose any fund where you’ve lost confidence in the manager;
• The Rising Dividend Investing blog ovbserves: Cash is King; Is this a Sign of a Risk-Averse Market?
• A pair of Prediction Market notes: Tradesports seems to be the only ones on the planet refusing to acknowledge the N.Korean missele test; Chris Masse explains why this is a debacleP: The TradeSports/InTrade’s North Korean Missile contract snafu; BusinessWeek offers the CEO Guide to Prediction Markets;
• Fascinating look at how Man Financial has risen to become a powerhouse.
• Business week looks at what’s Behind Earnings’ Surprising Strength; John Hussman wonders why Record Profits Don’t Excite Corporate Executives;
• Interesting new blog: Capital Chronicle
Plenty of interesting Technology / Science news this week:
• The Myth of the Living-Room PC;
• Might Apple get Delisted?
• Is Google a model for Hedge Funds?
• Can we get unlimited Energy From the Restless Sea?
• AOL offers glimpse into users’ lives
• State of the Blogosphere, August 2006
• 0-60 in under 4 seconds — oh,and its an electric car.
Music, Film, Books, etc
• I’ve mentioned The Party Party before, but for some reason, this mashup has been making the rounds again.
• Some years ago, I really enjoyed Dava Sobel’s Longitude; I just started The Planets by the same author;
• The LATimes has a long expose about the man behind the ‘Girls Gone Wild’ videos — its no surprise they paint him as a perv;
• Double Backflip — on a motorcycle (pretty amazing)
And that’s all we have from the 6000 feet — enjoy the rest of your weekend!
Hey Barry I saw you today at DEN. You were on the A concourse at Jimmy’s restaurant (I was wearing a funny looking pilot uniform). I was going to stop and say hello, but you were conversating with a lady. I thought it would be rude to interupt.
I saw him to. I’m pretty sure it was Angelina Jolie. That photo could have turned my year around.
Market watchers are all interested in the odds of a recession. You will not get an accurate view from stories making a big splash. Since an economist is unlikely to be newsworthy by predicting a 10% chance, it is not
Here is some crack blog investigative work on Qana:
I believe this will eventually be shown to be a massive fraud.
That was no lady — that was my wife!
adam stirring up the pot, i love it.
let me post now for cherry, semper and the other kool aid konspiracy kooks: how dare you question the accounts of the courageous freedom fighters of hezbola. fight the real enemy, tobacco, soda companies and those evil drug companies!
Qana staged? As were the other >1000 civilian deaths caused by the IDF/IAF in Lebanon? “Faked” or “exaggerated” are the arguments of the delusional or merely callous.
See Human Rights Watch Report: Fatal Strikes
Israel’s Indiscriminate Attacks Against Civilians in Lebanon
Note to Barry:
Absolutely fantastic site but topics like this a huge distraction.
This is all about how the blogs are undermining the traditional media’s often nefarious control over the flow of information.
This war has been historic in that the blogs have dissected and laid bare biased traditional media reportage.
Propaganda, whether of the financial variety under scrutiny here, or from Hezbollywood (via friends at Reuters and the AP) will no longer fly.