Record breaking! That was the week that was, as the Dow set another set of closing and intraday highs.
Barron’s Trader column notes that the "Dow Jones Industrial Average finished the week at a record high, its first in nearly a month, rising 138, or 1.1%, to 12,446. It’s gained 16% this year. The Standard & Poor’s 500 climbed 17, or 1.2%, to 1427, its highest close since November 2000. Both benchmarks have risen in four of the last six weeks." One small fly in the ointment: High beta stocks are participating less. Nasdaq 100’s advance — Barrons called it "half-hearted" — are the Technicians canaries in the stock market coal mine."
Economic news this week was rather benign — retail sales booming, inflation vanquished — if you take the government’s stats at face value (I sure don’t).
No need to fret over this — we’ve got you covered. All the noteworthy stories you may have missed, in one fabulous page. While we await the arrival of Festivus — here’s a linkfest for the restivus!
INVESTING & TRADING
• Herb Greenberg asks: Is it a brains or a bull market?
• Alliance Bernstein expects 2007 investment to be Positive, but not Robust: A Long Slowdown
• Michael Lewis (Liar’s Poker, Moneyball, The New New Thing) goes off on private capital: Stocks — Coach Class of Capitalism (its a must read) "At any given time in the capital markets there are at least two sets of rules — one for the rich and well-connected, another for the middle class, the Wall Street proletariat. The upper class rides in the front of the plane with their venture capitalists and hedge-fund managers; the proles ride in the back, with the mutual-fund managers."
• The BusinessWeek 2007 forecasts are out, and — whattayaknow — I am not the low forecast this year!
Also way cool — all of the forecasts are sortable, by mid- and year end- forecast, asset allocation, index, etc. (Suggestion: Could we see this on one long page, instead of 4?)
• I look forward to this each year: Doug Kass’ 25 Surprises for 2007 (and Part two)
• Bad Corporate Santa: The talk of Wall Street is the immense bonus pool
at Goldman Sachs. But as Dan Gross notes, "elsewhere in corporate
America, employees are far more likely to find lumps of coal instead of
bars of gold in their Christmas stockings this year." So if your boss was misrely this year, be sure to share your tales of "Christmas parties canceled, bonuses revoked, lame gifts, and general Scrooge-like behavior."
Send your examples to moneybox@slate.com by Monday, Dec. 18.• Smart Money’s Where to Invest in 2007
• David Aronson on How to Be an Intelligent Analyst in the 21st Century — be sure to check out the powerpoint presentation included (if no powerpoint, well, go get Open Office)
• John Hussman on Phase Three: The Speculative Blowoff
• Just because you love Tivo, doesn’t make it a great stock: When ‘Buy What You Know’ Doesn’t Pay
• The WSJ reports Record Cash in Money Funds (if no WSJ, go here)
• Barron’s Technical columnist Michael Kahn discusses what the Dow’s New High means — is it a New Worry?
• The WSJ on the Retirement Lies We Tell Ourselves (free)
• A new service — Timertrac — ranks market timers’ ongoing performance (see this Barron’s discussion)
• Why the Wealthy Love Tax-Free Bonds Um, lemme guess: ulta-safe, and no taxes?
• Fortune Magazine’s 10 rules for building wealth
• Why the All-Star Managers Failed to Make This Year’s Cut
• Is a Big-Stock Slump Turning Into a Long-Term Thing?
• About Transferable Stock Options: Google’s blog discusses their new option strategy; also Google and Citadel: Innovation at Work)
• Why are so many companies holding so much cash? An interesting analysis concludes: the tax costs associated with repatriating foreign income (Harvard, University of Texas at Austin, University of New South Wales, and NBER).
ECONOMY
The Wall of Worry came down quite a bit this week, as the Fed continued to focus on inflation rather than slowing growth:
• On the latest US data… No inflation? Puh-leeze! The Cleveland Federal Reserve sees Inflation very differently than does BLS
• Yes Virginia, it is different this time: Front page WSJ article quotes several pundits who opine as much: Housing, Auto Slumps, May Defy Usual Role, As Recession Harbingers (free)
• How Good Were Retail Sales Really? Thanks to a change in methodology, less good than reported.
• Debt and its Discontents: What is driving the economy? In Barron’s, Stephanie Pomboy says its Debt (if no Barron’s, go here)
• Economists Pleasantly Surprised At Benign Inflation Reading
• Forbes trashes the new Bogus Bonuses; See also Entrepreneur Mag’s Best and Worst Holiday Bonuses; lastly, don’t forget to particpate in the "Tell us if your Boss is a Scrooge" contest
• Some think what we have is a Resilient Economy;
• What does the global ratio of fighter jets versus private business jets mean to the Economy? Why, its a new obscure economic indicator: The Guns-to-Caviar Index
• Paulson Says: Agreement With China Will Narrow Trade Imbalances (video)
FEDERAL RESERVE
Not surprisingly, the FOMC kept rates steady and abrely changed their statement.
• Caroline Baum’s Letter to the Fed Chair (I hope it’s OK to call you Ben)
• Merrill Lynch sees "Aggressive Rate Cuts in 2007"
• Federal Reserve may have hit speed limit
• Fed Chair Bernanke in China, Urging the end of the Yuan’s Export ‘Subsidy’ (video)
• An instant Onion classic! Catching up with Alan Greenspan
HOUSING
Some mixed news in Housing this week — a notable improvement from the cascade of negative news:
• First-Time Home BuyersLook at Houses Again
• Realtors See Improvement Ahead For Housing Market, Home Prices; For a slightly more skeptical look at this, see Yeah! Cheerleaders say Housing Will Recover in Q1!
• Speaking of Orwellian cheerleaders: It looks like someone at the National Association of Realtors was deleting criticisms of their chief economist Davis Lereah over at Wikipedia;
• VIDEO: Boiler Room Mortgage Brokers (don’t watch on a full stomach)
• Bankers Report More Mortgages Being Paid Late or Not at All; see also Mortgage delinquencies a rising threat
• Real Estate Promotion of the Week! Buy a house, get a Glock (some restrictions apply)
RETAIL/SHOPPING
Retail Sales Data was quite a shocker this week, with a surprise number out of Commerce, and an increasing pace of discounting:
• Holiday deals are getting hotter; see also Price Check
• Is the shopping based on Sustained demand or opportunistic deal-hunting?
• SMARTMONEY has a good holiday section; check out their Luxury Gift Buying Guide and their Holiday Spending Worksheet
• From fashion to food, sites track deals and offer ideas for stumped gift givers via the WSJ Blogs for Shoppers (free)
• Lastly, Holiday Gifts For The Filthy Rich
Sentiment/Psychology
• Most investment strategists remain high on stocks, especially American ones
• Mark Hulbert notes that the Surprising contrarian sentiment hints bull market isn’t done
• A great column about the ays investors kid themselves –a bout their spending, saving and investing: The Retirement Lies We Tell Ourselves
• Divergences At The Market Highs: What’s Hot, What’s Not Among ETFs
War/Politics/Energy
• Silicon Valley VC Kleiner Perkin’s got a great big Green Investment Machine
• Absolutely fascinating article about the probles the US Army is having in the new world of asymmetrcial threats: Despite Its $168 Billion Budget,The Army Faces a Cash Crunch
• Iraq Lessons in Afghanistan?
• Report: Taliban regrouping in Pakistan
Media/Financial Press
• 2006 Merriam-Webster Word of the Year: Truthiness
• New York Times adds sharing tool
• An Online Newscaster’s Appealing Bafflement
• The Year in Media Errors and Corrections — don’t miss last year’s most hilarious correction
Technology & Science
• Wikipedia founder remakes Web publishing economics
• I’ve dealt with my share of bankers, and I find it terribly amusing that they don’t "get" Craig Newmark of Craigslist Craigslist Meets the Capitalists and Craigslist thumbs nose at Wall Street;
• Impressive live video/animation of NASA’s Mars Exploration Rover (MER) Mission is an ongoing unmanned Mars exploration mission,
• Business 2.0: Google’s copyright fix
• A different type of Web Fraud: In Web Traffic Tallies, Intruders Can Say You Visited Them
• Europe’s warmest autumn in 500 years
• Kleiner Perkins Goes Green; Meanwhile, Cringely is saying the VC game has changed
• Mozilla Ships Alpha Release of Firefox 3.0
• Flickr Co-founders: How We Did It
• LCD TVs Get 40 Percent Cheaper
Music Books Movies TV Fun!• I’ve been enjoying the free live music videos Amazon has been running. Check out Mark Knopfler and Emmylou Harris: Real Live Roadrunning as well as Diana Krall Live
• Mose Allison fans take note: He’s live at the Jazz Standard in NYC this weekend
• One last pleasant musical surprise: Bob Dylan’s new album — Modern Times — is unexpectedly good.
• Charlie Brown/Scrubs mash up: very funny!
• Lots of good books worth exploring in the WSJ’s Season’s Readings (free); See also, Barron’s Holiday Brain-Stuffers
• Liz Claman is one of my favorite CNBC anchors, and she has a new book of investment legend interviews: The Best Investment Advice I Ever Received. There’s an interview with her about the book here; and a chapter excerpt with Jim Awad here.
• Automobile Magazines 2007 All-Stars; I’ve driven nearly all of these, and the one that still thrills is the Vantage;
• Surly, bad-tempered Santa is making inroads: You Better Watch Out
• File this one under 10 years too late: Musicians Oppose Media Consolidation (See also Top 50 Music Videos Of 2006)
• 137-year-old brew tastes "absolutely amazing"
• The WSJ’s Time Waster has an entire column about the rise of the latest viral YouTube video hit: An Unrefined Musician Uses Stop-Motion VideoTo Play a Catchy Tune (free)
• Jason Kottke on the best spam message ever (NSFW)
Its practically a heat wave here in the NorthEast, with temperatures soring towards 60 degrees — 10 days before Christmas! I’m taking the convertible out of the garage and going cruising!
Enjoy the rest of your weekend.
Well Barry, when I sort by Mid-Year numbers in the BW poll, you are the second most bearish person in the group! Does your mid-year S&P forecast represent the the low point during a late spring correction, or a recovery after a much more severe correction in early spring?
You also seem to among the few people who believe that the bond market has got this more right, and the yields will continue the downward march!
Of course, these are just forecasts, but it’s always fun to look at the numbers.
Your end-year forecasts are bullish. Is this a sell-signal?
Speaking of housing, the trends in Silicon Valley RE stats are often evident in the actual numbers (rather than the headlines). Our RE stats are now posted at:
http://www.viewfromsiliconvalley.com/id286.html
To keep up with “What’s Really Happening” in SIlicon Valley, please visit:
http://www.viewfromsiliconvalley.com/
Thanks!
Nope —
I do not think we have dodged the correction bullet yet, but once we flush that out of the system, we can start making sustainable progress.
RE: Doug Kass 25 Surprises
Was Part 2 a joke? Part 1 seemed somewhat founded in reality. Part 2 sounded like a carnival reading.
Barry, sorry to see you leave the bear camp. Your S&P prediction for 2007 is a sad but understandable capitulation, in my mind. I know it has been hard for someone like you running other peoples’ money and constantly being second-guessed by others, to maintain your convictions and stay the bearish course. Even the Elliot Wave folks turned short-term bullish here a few weeks ago! For myself, a committed skeptic, I will soldier on alone. With your defection I am convinced more than ever that this will all end very badly…
Hardly
As someone else pointed out, I am the 2nd lowest midyear forecast.
See this sorted version
http://bwnt.businessweek.com/fearless_forecasters/2006/index.asp?sortCol=dow_jones_mid_year&sortOrder=ASC&pageNum=1&resultNum=25
per BR:
“Its practically a heat wave here in the NorthEast, with temperatures soring towards 60 degrees — 10 days before Christmas! I’m taking the convertible out of the garage and going cruising!”
A few hours ago, I was chatting with a friend of mine in southern Finnland and he said he was going to work (fisherman, so he goes early). I asked how much snow he had to face and he said none and attributed it to “global heatenning” which I suppose means global warming. Folks, if they do not have snow on the ground in the Gulf of Finnland in December, we have a problem.
I am not exactly sure what that means in investment terms, but I would keep an eye on the grain commodities and anything else that is weather-related. For all George Bush and I know, it is just one of those things, but it’s also just possible that we’ve finally tipped things over enough for Mother Earth to seek some revenge.
It’s a defection – pure and simple. It’s also a case of “having your cake and eating it.” You get two chances: the mid-year, when, if you’re right you can change your mind about the year-end… and the year-end (where if the mid-year doesn’t work out, the year end still could).
Since that was submitted last month, I’ve already changed my mind!
Mac10, what a glorious lack of perspective your comment shows. Barry’s +5% year-end call is BEARISH in regards to the average annual returns on the market, which are usually between 10-13% and are above 15% almost 40% of the time!
Only 9 of the 80 turned in out-and-out bullish projections (bullish meaning “above average”). Meanwhile 52 turned in below-average projections.
Looks like a “buy” signal to me!
Oh, and in reference to Herb’s “is it brains or a bull market?” question, I will leave this here, since his article doesn’t allow comments. It is a lack of brains to fade a bull market, and it shows brains to ride it.