One-Two-K linkfest!

The Melt-up continues. The market is on fire, and it looks like nothing can or will stop it. Nuts with Nukes! Weak Earnings! Mixed Economic Data! Hawkish Fed talk! None of it matters, as this is a runaway train, and woe be he who steps on the tracks in front of it. The usually circumspect Mike Santoli called it a  "Get-Me-In-Now" Market.

Forget Y2k . . . The Dow is now in one-two-k (12k) territory.

And funny thing is, the Dow was the laggard this week, gaining less than a 1%. The SPX tacked on 1.2% for the week, tagging 1,365 — a five-year high. Nazzy was the star, up 2.5% to 2357. Both the Dow and the S&P are now over their May highs, with the October option expiry coming up this week.   

Are you Long? Short? In cash? All three? Well, none of that matters right now. Warm up your mouse hand, and get clicking — Its weekend linkfest time!


• Barron’s Alan Abelson calls this "One of Those Aberrational Stock Markets" (if no Barrons, go here)

• Oh yeah? Shut Up, and Run With the Bulls

• Bernie Shaeffer is looking for another 15% on the S&P500 from here

• Gee, where did all the Bears go? (And why do the Bulls seem so insecure?)

Insurer Earnings Are Soaring

• Two terrific discussions on the future of China: The Great Chinese Profits Debate and Is China Growing at the United States’ Expense?; (see also China Quarterly Update pdf)

• Fascinating question:  When Does the Fed Cut With the Dow at or near Record Highs?

• Raymond James Jeff Saut asks: How Cheap is the Dow?

• The HP story gets messier and messier. Somehow, I doubt credit for the turnaround goes to the prior CEO: Carly Fiorina’s Revisionist Chronicles   

• Earnings have been less than wonderful — thought they are still on track for double digit year-over-year gains.   

Weak Results Dim Hedge Funds’ Luster — My suspicions are that alpha chasing hedgies are a large part of this recent move;


• How much does housing wealth boost consumer spending? (The surprising answer: more than twice stock market wealth)

• Robert Rubin on America’s "Deficit Disorder"

• Retail Sales Ask: "What Soft Landing?"

• Fed rethinks view of housing-led slowdown

The Absurdly Large BLS Revisions, part II

Bankers saw it coming

Check out the total lack of agreement in the following reports:

Fed Beige Book Says Retail Sales, Services Demand Picking Up
U.S. Growth Near`Stall Speed’ Raises Recession Risk
Conflicting Signals—Best Third Quarter in Years
Chip sector expected to issue lackluster reports
Fed Reports Resilience in Economy
Job Losses May Turn Housing Slump Into a Rout
-Services  — the largest sector of the US economy — is now growing at the slowest pace in 3 years

Goldman Lowers GDP and Interest-Rate Forecasts


• Interview with Kenneth Heebner, on Surviving a Real-Estate Slowdown;  Since 1994, Heebner has managed the $1.2 billion CGM Realty Fund. It has the best 10-year record of all real-estate-focused mutual funds, according to fund tracker Lipper Inc. So it may be worthwhile to hear what Mr. H has to say.

• Seeing Something to Cheer in a Big but Stabilizing Inventory of Homes   

• Dallas Fed says "Drag from Residential Real Estate could get much worse."

Guest Blogger Stephen Colbert on Housing

• Investors Struggle With Aftermath Of Condo-Investing Fever 

ARMs Control for Borrowers ($)

• Don’t say you weren’t warned: Prices in 100 U.S. Cities Expected To Decline for Next Few Years; Of course, if mortgage rates plummet further, that may not happen. See also: Where Home Prices Are Falling, Rising or Just Staying the Same

Tom Toles amusing take on Housing

• The good news:  For homeowners who have been putting off
remodeling projects, now may be the time to get started. Sluggish
home-building demand is pushing down the cost of construction materials
and spurring remodelers and other professionals to take on smaller
projects — and sometimes cut fees.

Energy & Commodities

An Oil Baron Not Afraid to Be Candid

Which Way Is Gold Heading?

How Long Will The Commodities Shakeout Last?

• A close up look at commodity traders:  Pit Bulls

Politics Media Military

I rarely link to Time magazine (a matter of interest, not politics) but this week, they have lots of really interesting stuff:

A Marine’s ‘Letter from Iraq’ moved quickly beyond the small group of acquantainces and hit the inboxes of retired generals, officers in the Pentagon, and staffers on Capitol Hill. Regardless of your views of the war, you cannot read this without feeling proud of our military, working under trying circumstances and still doing their level best.   

•  Curious as to what Economists think the battle for the House (and less likely, Senate) will mean to the economy and to the markets? (select "
Election Impact")

• Ever since America’s decisive military victory — and it was originally a decisive military victory — Iraq has been nothing but trouble. TIME magazine reports on the errors and bad guesses, before and after the war, that got the Bush Administration into this spot.

• This Lancet Study is sure to generate pushback:  Iraqi Death Toll Exceeds 600,000,Study Estimates

• Time magazine on the End of the GOP Revolution; I actually thought they top ticked it last year when — for no discernable reason — they put the shrill blond harpy on the mag cover.

A Revolt of the Generals?

Trow da bums out? Tradesports gives the GOP only a 33% chance of retaining control of the House. (Last Price: 33.1), down big from lst week’s 40% odds; GOP control of Senate remains over 70% (Last Price:

The market must think divided government is good.

Technology & Science

Google is slowly moving into Apple’s position as the dominant news story, on 100s of unrelated items. I wasn’t trying to spotlight them, but note how many Google items are sprinkled here:

•  Google’s Free Web Services Will Vie With Microsoft Office (Docs & Spreadsheets)

• An example of this new web based collaborative technology would be this real estate agent’s  Buy Versus Rent Spreadsheet. Think about how many fabulous apps Google maps open API has spawned; Now apply that to spreadsheets. The possibilities are practically  endless;

Way cool: The MIT computer assisted sketch simulator (Really drives home the meaning of going back to the drawing board . . .)

• James Altucher inspired me: Blogger Spotlight

•  11 Companies that are changing the world

• Distant Planet is Half Fire, Half Ice

Why Apple Will Change TV

• Go ahead, call it: 877-GOOG-411

• Who knew?  Exploding Stars Influence Climate Of Earth

• Forbes goes YouTube crazy: The YouTube Revolution

Is Windows Near End of Its Run?  an interview with Steven A. Ballmer, CEO of

• Apple & U2 paint the iPod red 

Music Books Movies TV Fun!

Question: Is Borat funniest movie ever…or just the most offensive?   

•  Peter Gabriel has been opening his tracks up to fans, and holding a remix contest. The results are pretty interesting

Dude, Where’s My Film?

• There are few De Niro movies — in fact, few movies period — funnier than Midnight Run;

• I greatly enjoyed both The Tipping Point and Blink (the former much more than the latter), but I came away with the impression that these were interesting magazine articles  s t r e t c h e d  a little to be full books. Apparently, there are other far harsher critics: The NY Observer on Passing the Gladwell Point;

• Following Paul Kedrosky’s advice, I just received the lovely Index Funds: The 12-Step Program for Active Investors. It is so lavishly illustrated, it is practically a cocktail table book.

• NBC is running online-only "webisodes"  of The Office (deleted scenes here)• DOT: Dangerous Intersection Causing Some Pretty Cool Accidents

• This close to an election, and Jib Jab is surprisingly silent;

• Ever wonder what happens when you dump a bucket of liquid nitrogen into a swimming pool?

• Guiness World Record for most T-Shirts worn at one time

That’s all from the gloriously sunny NorthEast, where on the breezy north shore of Oyster Bay, the OysterFest beckons. Time to get shucking!

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What's been said:

Discussions found on the web:
  1. alexd commented on Oct 15

    Since I was born in NYC I am prone to complain so here it goes:

    Great list but do you think I have nothing to do but read interesting and pertainent articles? Sheeesh!

    Be well

  2. anon commented on Oct 15

    I think the optimists underestimate the wealth-effect impact of the housing bubble on consumer spending and the pessimists overestimate how soon the poverty effect from the bust will occur.

    There’s plenty of room to have a decent stock market rally in the interim.

  3. whipsaw commented on Oct 15

    One good thing about Linkfest is that it is generally so eclectic that it is hard to post anything that is OT, thus…

    _One aspect of the housing-as-an-ATM discussion that is rarely mentioned is that it was/is perfectly responsible to borrow out part of your equity to pay off car loans, usurious credit card balances, etc. since you not only lowered the effective interest rate, you got an interest deduction. Ideally, you wouldn’t have these debts, but most people do and getting rid of them is not exactly the same as pissing the money away on vacations or similar. The tipping point is whether you borrow so much in paper equity that you are upside down once prices fall? The other issue is whether you turn around and run up new revolving/auto debt once the old is eliminated, in which case you have just found an old way to dig a new hole.

    _BR has been getting beat up lately for “being wrong.” This strikes me as rather short-sighted and unfair considering that the game ain’t over yet. True that the markets have been going up since August, but there are a lot of dynamics involved in that which I would suggest have nothing to do with macro fundamentals and a lot to do with crowd control. Let’s see what happens after the elections, shall we?

    _For my own part, I’ve concluded that the best risk/benefit posture to be in (other than cash) in the present environment is delta-neutral straddles/strangles since I think that volatility pretty much has to rise from current levels in any case.

    _ I am not going to do any more directional trading at the index/etf level beyond what I already have in play until I see 13/34 week crossover on the charts. I will miss some “big moves” but there is a lot to be said for ignoring all of the noise and just watching the weekly charts to see where things are actually going.

    _As Toddo of minyanville has said many times, “Discipline before conviction.” I think that is the most useful trader advice that can be had because it subsumes that you have some rules in place before you go into a trade and if you don’t, well then you will probably lose. I already had very strong convictions, so now it’s time to work on discipline.

  4. angryinch commented on Oct 15

    How Bernie Schaeffer stays in business is one of the Eight Wonders of the World. I’ve followed his work for the past few years. Has this guy EVER made a correct call?

    He pins everything on option ratios. But he has no idea who’s buying these options and for what purpose. That’s why he’s wrong so often. A coin flip would be a vast improvement.

    Placing all your emphasis on one indicator is a certain road to failure. I recall a couple of years ago he made MSO (Martha Stewart) one of his top five picks for the coming year specifically because of the huge short interest in the stock. Even he thought the company was a joke. Yet he reco’ed buying the stock. The stock fell 50%.

    He also seems to put a ton of emphasis on analyst views in terms of sentiment, i.e., if a stock has 15 covering analysts and 13 have a buy rating, then according to Schaeffer, who’s left to upgrade?

    Well, no one. But who effin’ cares? 90% of all ratings are buys. That’s reality. I’ve seen stocks rise for years despite having every analyst reco’ing a buy. Does it mean anything? Uh, no.

    Good luck to anyone placing their bets with Bernie.

  5. Michael M commented on Oct 16

    Just want to share a bit of research I’ve done on this latest melt-up.

    Since 1980 the S&P 500 has closed down more than 0.5% 1622 times. There has been 6760 trading days in this period. That means that the index has closed down more than 0.5% 23.99% of the time.

    There has been 105 times where the index ran for 10-19 days without dropping 0.5%, 17 times when the index ran for 20-29 days, 3 times when it ran for 30-39 days and 1 time where it ran for 40 days or more (44 days in 1995 to be exact). We have lately seen a 31 day run in June to September followed by a one-day 12.99 point “correction” only to resume a 10-day run followed by a one-day 7.15 point “correction” followed by a 16-day uninterrupted run (when including Friday’s closing). Since 21 July (that’s 59 trading days) we have only had 2 days of more than 0.5% down. Buying all dips since 21 July would have been killer.

    From 1997-2005 we only had 2 runs of 20 days or more (22 days in March-April 1998 and 20 days in October-November 2005). This year we had a 20 day run in April-May, 31 days in June-September and now 16 days running.

    This year we have had 31 days of at least 0.5% down days out of 198 trading days (15.66%).

    We have only seen 4 years (1986, 1988, 1989, 1995) in this period without 3 back to back days where the index lost at least 0.5% each day. The last time we saw 3 such down days in a row was September 2005.

    Draw your own conclusions. Personally, I would love to see this crash hard and in general advise to ask WHY, not just WHAT. I think we are in new territory.

  6. K-Dawg commented on Oct 16

    Hmmm….the Hulbert Gold Newsletter Sentiment Index was -10.7% on 10/4/06 according to the above link.
    But then went to -25% on 10/11/06 according to Peter Brimelow:

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