MLK Weekend Linkfest

Where to begin this week? Markets got off to a rocky start, found their footing, and never looked back. Commodities plunged, with Crude Oil reaching a 19 month low, falling 6% for the week, down 13% YTD. Retail Sales were robust, up a seasonally adjusted 0.9%, above consensus of 0.7%.

The Industrials gained 1.3%, while the S&P500 tacked on 1.5%, but it was the tech-heavy Nasdaqwhere the real action was: After lagging in 2006, the Tech index led the way (if we ignore a few late week profit warnings from big names), with the Comp jumping 2.8%. Meanwhile Apple excited geeks and investors alike.

Jeez, another 3 day weekend? Ok, let’s set up em up for your clicking pleasure:

INVESTING & TRADING

•One of the more intriguing things about pulling the fest together each week is how clearly the two sides have hardened in their views — I cannot recall the last time consensus was so split:

– Goldilocks still defies the bears: Investment managers do not generally believe in fairy tales, but
there is one that dominated all discussion as 2007 began. Unless a lot
of investors are wrong, Goldilocks is alive and well and impervious to
the bears who believe the US and world economies are on their way down.

– What if bulls are wrong about 2007? Contrarian forecasts global recession and market meltdown

– Too Hot, Too Cold — or Just Right?: a fair number of panelists don’t expect the
party to end this year. The sort-of-consensus view: U.S. stocks will
rally "not much" to 8%-10% in ’07, dividends included, though some see
a violent shake-up along the way. Bonds won’t be terribly interesting,
and the dollar will continue to struggle.

– Danger ahead? Stocks’ early warning signal:  According to the Stock Trader’s Almanac, how the S&P 500 performs in the first five sessions of the year can be an indicator of how it will perform for the full year.

– Already in ’07, There Are Signs the Conventional Wisdom Is Off

•  A Contrarian Approach to Investing

• World’s Assets Hit Record Value Of $140 Trillion — fascinating chart, too

• Cramer takes alot of grief from detractors (most of it unjustified), so when he utterly, precisely, and undeniably nails something, he deserves credit for it: 1/10/2007 9:30 AM EST Memo to the bulls: "this is what you have been waiting for: a DOWN opening. This is the opposite of the first day of the year. It is a godsend. YOU MUST BUY THIS DOWN OPENING"   He couldn’t have been more right.

•  As Oil Falls, the Dow Becomes a Gusher (Barron’s)

• How Wall Street ‘Sweeps’ the Cash Gee, go figure Wall Street firms have figured out yet another way to snake some coin from their clients. . . 

• Marc Faber Says Global Assets Markets Face `Severe Correction’  Faber talks with
Bloomberg about the outlook for the U.S.
economy, the dollar, commodity and stock prices and his investment
strategy. (See also: Video)

• Two inapposite columsn in the WSJ : Energy Stocks May Lack Fuel To Help Market and Rapid Plunge In Price of Oil May Fuel Growth (if no WSJ, go here: Good for Retail, Bad for Earnings?)

• John Dorfman on why Under followed stocks outperform: Wall Street Analysts Stumble on 2006 Stock Tips  (I wonder if this is merely a function of market cap size)

• Compare when the gains came about since the March 2003 lows on til January 2007 — contrats Nasdaq Gains with Dow Gains — some interesting differences.

• The bull market has at least a little further to run, according to the contrarian view.

• Big recovery seen for Big Biotech in 2007

• Trader Interviews: just what it says: Interviews with various traders 

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ECONOMY

What Wall of Worry?

• Art Laffer on the Yield Curve: He says "Its different this time" 

• Is the ‘Growth Recession’ Ending: Incoming data suggest a stronger pace of economic
activity than thought likely a month ago, leading Morgan Stanley raise GDP estimates. Also, Harris of Lehman Expects 2.5%-3% U.S. Growth in First Quarter (video)

• Better-than-expected December retail sales give economy boost

• Old Economy Rules Need Modernizing:  Some economists talk
about the U.S. economy as if it were still 1890. Their old-economy concerns seem to have little relevance
to today’s new economy.

• Bill Gross Says U.S. Nominal GDP Growth Will Drop to 3.5% Range (video) 

• Anyone notice how the banks and credit unions across the country have
increased their interest rates on bank deposits? You can get 5.5% to 6%
now on 1 to 3 year maturities. What is it that Banks know that all these analysts don’t? (See also: Banks’ Cry: ‘Give Us Your Cash!’)

• Fortune’s Best Company to Work For 2007; Guess what firm grabbed the top slot?

• Study says tax cuts aid richest-report: The 2001 and 2003 tax cuts offered the biggest benefits to families
in the highest income categories, according to a citing a Congressional study by the nonpartisan Congressional Budget Office study. Families earning more than $1 million a year saw their federal tax rates drop more sharply than any other group.

• What are the jobs Americans won’t do?  Dirty Work

• Best. Greenspan Art. Ever.

 

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HOUSING

Real Estate remains the most vulnerable sector of the economy, and the data flow continues to be bleak:

• The National Association of Realtors sees Home Prices Rising in ’07; I figure they are suffering from blunt head trauma. (no, really — they are tripping). As if on cue, 3 home builders announce record setting cancellations of sales. 

•  File this one under Holy Snikes! California Company Announces No Mortgage Payment for 12 Months

•  Fascinating study by a Wellesley College prof on Buyers vs. Sellers: It paints a picture of a market nearing a standstill, where would-be sellers take their homes off the market rather than accept markdowns. Over such a lengthy period, even in a slow market, 70% of these homes should have sold. But theonly 30% moved in the current market: The Standoff could lead to recession

•  The Phantom Rebound in the Housing Market (See also Housing market pain not revealed by stats);

• Whoops! Pricing Error on Mortgages Led to Lender’s Collapse

• Foreclosures increase 51 percent nationwide — but they are still not at a record level yet.

•  Through a Glass, Darkly: How Data Revisions Complicate Monetary Policy

• Housing Trend Spotting for 2007   

• The WSJ’s Real Estate Journal moves older housing articles over to their free site, for you cheap %$@*s who don’t subscribe.

 

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Sentiment/Psychology

• Herb Greenberg on Contraian Investing: If Your Friends Jumped Off A Bridge, Would You? My own take on the subject is here: Contrarian Approach to Investing 

• If you don’t stay humble, the market will humble you

• Contrarian or conformist?

• Four Overlooked Qualities of Successful Traders

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War/Energy

• Thanks, Goldie!  GSCI Cuts Energy Exposure (Again)  Note that the last time they did this, the markets lit up from July til December;

• Ethanol Bandwagon Picks Up Speed

•  FRIEDMAN on Green Coal

• Surprise — BP Chief Executive Lord John Browne will retire early in July

• Lots about Iraq:

– Iraq Dominates World Politics, but Not Markets (NYT)   

– Bush Breaks 150-Year History of Higher U.S. Taxes in Wartime  (Bloomberg)

– Murtha Outlines StrategyTo Restrict Troop Surge (WSJ free)

– Same Old Fatal Mistakes on Iraq (Bloomberg)

• Our approach to fighting terrorism is pathetically inadequate: Make Them Fight All of Us

• Meanwhile, U.S. command requests new troops to fight Taliban in Afghanistan

• Doomsday clock ticks; Nuke programs push world to ‘perilous period’

• YouTube History of the Middle East in 2.5 Minutes

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Technology & Science

In case you somehow missed it, Apple introduced a new  mobile phone. Long story short: Its Drool Worthy.   

There’s a lot of other coverage on it, but here are some of the more interesting items you may have missed:

–What the iPhone Means for Everyone from Cellular providers to chip makers to handset competitors

-Steven Jobs: iGenius

-Good comparison of various smart phones: The iPhone is here

– Why use Cicso’s Trademarked name iPhone if you know it will invite litigation? Free publicity (also, expect 3G speed eventually)

– full iPhone round-up about all the rest

•  Record Warm Year for U.S. in 2006

• Oh, and uh, CES was this week. The WSJ blogged it.

• Duo Envisions Merging Best of TV, Web: KaZaA and Skype’s founders are backing a video start-up that promises to let users watch broadcast-quality movies and TV shows on their PC

• Mystery of world’s biggest flower solved

• Gartner: Vista still not ‘done’

• The 46 Best-ever Freeware Utilities

• The Snoop Next Door:  Bad parking, loud talking — no transgression is too trivial to document online. WSJ reporters on new Web sites for outing fellow citizens.

• Octopuses are the ultimate chameleons (Amazing video)

•  2 0 0 6   P R I V A C Y   Y E A R   I N   R E V I E W 
 

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Music Books Movies TV Fun!

• The Indie cult classic flick Tao of Steve is showing this weekend on IFC; If you never saw it, definitely check it out.

• We mentioned Ray LaMontagne recently; Here’a great free concert of his for download;

• I just love the name of this band: Ferocious Bubbles.

• Extras, the hilarious show from the creator of The Office, returns Sunday.

• Stephen Colbert and Bill O’Reilly will appear on each other’s respective shows on Thursday, January 18;

• The missus is finally reading a book I gave her years ago, and is loving it: The Time Traveler’s Wife

• Nice roundup of the Detroit Auto Show via the NYT

• New Yorker’s film critic Davd Denby’s take on the present and future of movies: Hollywood looks for a future

• Time lapse of Pablo Picasso painting in oils, allowing us to see his creative process at work.

• From the same maniac that brought you the stop motion classic, Amateur comes the stop motion Everything (Hyper)

Another rainy weekend in the North East — I have a ton of movies queued up, too:  In addition to the Tao of Steve, we have War of the Worlds, Memento, Superman Returns, and Kill Bill part II

Enjoy the extra day’s rest!