An up week for the major indices — the first one of the last three for the Dow and S&P500. The Key driver? Barron’s Trader column said it was "DEALS, LOTS OF THEM" — some real, some rumored. Profits are high, as are cash balances, while interest rates are low.
The takeover talk has been centered on banks. Citigroup is rumored to be spinning off or selling units; There’s been lots of talk about a management shuffle. Merrill Lynch says Bank of America is "very interested" in scooping up Barclays. Barron’s noted: "From banks to industrial companies to airlines, it seems no
sector, cyclical to staples, escaped the speculative gaze of potential
buyers in a world awash with money. A short seller’s nightmare, in
other words."
As someone who plays on both sides of the street, I can attest to that: Selectivity in shorting (specific catalysts, small short interest, tight stops) are the keys to not getting carried out on your shield.
All that gets shoved aside, as this is a Fed week (and I think everyone knows the FOMC will give us a big "nuthin’ done").
No matter: Its the weekend, and you know what that means: Linkfest!
INVESTING & TRADING
• Goldilocks, soft landing, and global liquidity: Barron’s has some fun with cliches (if no Barron’s, go here)
• Deal Talk Makes the Market Go Round: "It remains very profitable to borrow to buy."
• Coming soon: A Passage to India ETF (if no WSJ, go here)
• Good editorial in Barron’s this week by our pal Doug Kass: Look Who’s Selling
• Revisting the Technicals of the Homebuilders (we have been long selective homebuilders since September, but its only a trade — not an investment)
• Eric Savitz: Should Yahoo Buy Dow Jones? (The Debate Rages On) Savitz notes that Yahoo has a $36B cap to Dow Jones $3; I’ll add Yahoo grosses $6.2B and nets $1.2; DJ takes in $1.85B, earning about ~$150m.
• How uncompetitive are the US markets? Well, Wall Street is about
to hand out a record $40 billion in bonuses, so I gues sthey ain’t that uncompetitive: Wall Street plays the scare card• Nobel Prize winner and NYU Prof Robert Engle on The Value of Volatility (I had my own amusing run in with the Professor here)
• Julian Robertson on Irrationality in Markets
• MacroMan: from paypal to Clarium
• Roger Nussbaum on Evolution of Indexing
• Its that time again:
• The S&P 500 at Your Fingertips: A great source of Historic Index Reference Data
• Is Wharton Prof Jeremy Siegel right about the historical bubble: Was it Only Tech & Telecom?
• Global Investing bearish on dollar, too
• Fascinating FT article: Goldman’s top alumni wield White House clout (free); Also, Goldman Sachs Flagship Hedge Fund Falls 11.6 Percent
• How to Succeed in 2007 from 50 movers and shakers
• Cody Willard and I each made an appearance at the new CNBC.com (the video has been a bit glitchy)
ECONOMY
The Wall of worry continues to build:
• Talk about the soft prejudice of low expectations: Jobs Data Keep Economic Optimists Smiling; Its hard to think that 132k new jobs would be described as "robust" or "strong" — but there you have it.
• However, Rumors of Wage Gains have been greatly exaggerated
• High-Tech Strategist Fred Hickey’s macro concerns: Fun With Fred
• Consumer borrowing fell in October by the largest amount in 14 years, reflecting a big drop in auto loans.
• Assorted Bloggers’ Take on The US Dollar
• Treasuries Post Biggest Weekly Drop Since June
RETAIL/SHOPPING
More retail data this week:
• Holiday shoppers taking their time — Surveys find consumers waiting for deals — or not buying at all
• Gift Shopping Online: Amazon is deep discounting select DVDs;
HOUSING• Astronishing: Of all the Real Estate Flipper Books written over the past 25 years, the vast majority have come out this past year!
• When Will the Housing Market Bottom? (we are about halfway thru the down cycle)
• The Not-So-Hidden Truth About Home Prices (no, they are not down just 2%)
• The End of the Great American Housing Boom What’s so fascinating about this piece is not the thesis — Housing boom, Economic bust, yada yada yada — but the concurrent release on YouTube of a discussion by the author.
• Credit continues to be an issue: More Borrowers With Risky Loans Are Falling Behind; and Cracks in the Mortgage Market are Becoming Visible; Nouriel Roubini remains the most vocal bear ont he subject: The Sub-Prime Lending and Borrowing Disaster..and the Broader Risks to the Financial System
• When it does, and doesn’t, make sense to refinance a piggyback mortgage.
FEDERAL RESERVE
Lots of Fed speak this week, and commentary also:
• The Fed is developing a credibility problem:
• Has the Fed Lost Control Over Interest Rates? We noted over a year ago that they effectively outsourced their job responsibilities to China
• Bernanke’s Bear of a Nickname
• ECB’s Trichet Says Rates Still `Low’ After Increase
Sentiment/Psychology
• Art Attack: This year’s modern and contemporary auctions obliterated sales records.
• The Pursuit of Happiness: Six Experts Tell What They’ve Done to Achieve It
• Newsletter Sentiment still skews very bullish
• The curious economics of temptation
War/Media/Politics/Energy
• The NYT had a beautiful section on Pearl Harbor Revisited; Be sure to read the initial never before published pieces on how the US Navy ships Pearl Harbor were salvaged from the Pacific floor, and see the slide show. (the entire story is simply amazing)
• The big news this week was The Iraq Study Group Report; DC went into a frenzy, and the President’s Approval slips to all-time low in the Zogby Poll (So did Congress); Slate points out that the Iraq Study Group talked to generals when it should have talked to corporals.
• Does Syria Hold the Key to solving Iraq ?
• The Media Maven lambasts CNBC’s Erin Burnett for her interview with former analyst Henry Blodget, and garners our Quote of the week award:
"If you ever doubt The Business Press Maven when he tells you how little of what the business press says is informed by an accurate sense of even recent history, think back to this moment. I have nothing else to say on this issue. Except that even Henry Blodget had to correct the historical record"
• China is going Green, heavy emphasis on Solar (Thomas Friedman notes we are falling behind)
• Was the USSR better prepared for peak oil than is the US ?
Technology & Science
• I did some major changes to the blog; (it came out pretty well)
• Are your wife or kids BlackBerry Orphans?
• 77 Ways to Learn Faster, Deeper, and Better
• Does perfect memory make you smarter, or just drive you nuts? A Head For Detail
• Coming this week: A Meteor Shower to Dazzle
• Microsoft is still Looking for a Gambit to Win at Google’s Game
• Stop Worrying About Copyrights !
• Scientists Spot ‘Tsunami’ on the Sun (Way cool video on Solar Flares)
• Have Life Insurance? Maybe. Cellphone Coverage? Of Course!
Music Books Movies TV Fun!• Guess who downloads music without paying for it? Media Leaders Go iPod Crazy
• I do Lunch with Herb!
• I’m working on my year end music wrap up, and I forgot how much I liked James Hunter’s People Gonna Talk. Van Morrison calls him "the best voice and best-kept secret in British R&B and soul." Very retro, very cool.
• Fascinating story: More than a quarter of a century after an anonymous photograph of an
Iranian firing squad won the 1980 Pulitzer Prize for Spot News
Photography, the Pulitzer Prize Board has said it will award the
certificate and $10,000 cash prize to Iranian photographer Jahangir
Razmi.• Free as a Bird video; Its hard to believe John Lennon was killed 26 years ago;
• Economist and Freakonomics author Steven Levitt guests on the Colbert Report
• ‘As the Music Turns’ Might Be a Better Title
• Edifice, Complex: Billowing glass. Rippling titanium. Swooping steel. The engineers and designers at Permasteelisa turn the world’s most daring buildings into reality.
• via The Onion, one last Retail post: Holiday Advertisers Seek Coveted Dicktard Demographic (NSFW)
• Mariah Carey battles porn star over stage name: Mariah Carey is trying to block porn star
Mary Carey from trademarking her similar-sounding name. The Pop singer says
that fans could get the two performers confused. I can see how that
might happen, given that Mariah Carey’s music blows . . .
That’s all from the very cold NorthEast, where it was 18 degrees yesterday, and tomorrow is supposed to be hit 50 degrees. Stay warm (or cool, depending on the day!)
“Art Attack” was interesting in that more writers seem to be zeroing in on the “flood of money/liquidity” trend and how it is affecting the art market and the price of tangibles.
In a recent Financial Times article on the Asian art boom, Marc Faber was quoted on the issue of where this money was going. His view: much of the windfall from rampant money and credit creation is benefitting those who work in the financial industry.
In other words, the investment bankers and hedge fund guys in London, New York are getting rich from speculation and deal-making while real living standards continue to decline for most (as purchasing power of fiat currencies declines).
Those at the top of the heap are increasingly trading in their piles of paper money for hard assets and tangible goods, bidding up the price for very high end real estate and artwork in the process.
Hey Barry, I just wrote up a small piece on some data I found on CrestmontResearch.com. Couldn’t find any good charts but the stats say it all.
Tell me what you think.
http://investorsentiment.blogspot.com/2006/12/
dow-deja-vu-i-wish-i-was-able-to-find.html