Another challenging week in the marketplace: Tuesday saw the 2nd biggest Dow drop of the year, off nearly 243 points. Barron’s Trader column notes it was the Dow’s "second-biggest weekly drop of the year, closing down 166 points, or 1.4%, to 12,110. It had taken the Dow 82 trading days from its first close above 12,000, on Oct. 19, to its February peak at 12,790 — and just 15 days to fall back below 12,000, which it briefly did at midweek."
Other indices saw similar set backs: The S&P500 fell for the 3rd time in 4 weeks, sliding -1.1%; the Nazz dropped 0.6%, while the Russell 2000 slid 0.8%.
The NorthEast weather was frightful, so our linkfest is somewhat abbreviated this week:
INVESTING & TRADING
• Video Debate: Bull versus Bear:
–Barton Biggs Says U.S. Stocks Near `Bottom,’ May Gain 15% — Barton Biggs, a former Morgan Stanley strategist who now runs the $1.3 billion hedge fund Traxis Partners LLC, talks with Bloomberg’s Monica Bertran about the outlook for global stocks, the potential impact of rising defaults in the subprime mortgage market on the U.S. economy and his investment strategy. (Bloomberg Video)
–Dennis Gartman Expects `Sustained Bear’ Market for Stocks — Dennis Gartman, economist and editor of the Gartman Letter, talks with Bloomberg’s Kathleen Hays from Virginia Beach, Virginia, about the stock market and his strategy for investing in commodities. (Bloomberg Video)
• What does the Dow Theory have to say about the stock market’s recent weakness? The short answer: Bullish Over a month ago, it flashed a bull-market reconfirmation signal. (although since then, it has closed nearly 500 points lower). (Marketwatch)
• These charts of the Home Builders show how badly you can get burned when you misuse technical analysis to rationalize preconceptions. Very dangerous.
• Do Hedge funds have to disclose to U.S. Bankruptcy Courts when they had bought their shares and how much they paid for them? It turns out yes: Since When Don’t Investors Have the Right to Know? (Bloomberg)
• Bill Gross on Ten Little Assets
• Jim Rogers sees U.S. property crash Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets. "You can’t believe how bad it’s going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York. "It’s going to be a disaster for many people who don’t have a clue about what happens when a real estate bubble pops. (Reuters)
• How safe is your trading account from "Intrusions?" Floyd Norris points out the latest online brokerage account scam. (New York Times)
• Bracketology: March Subprime Madness!
• Hunch about markets being overvalued pays off for Harvard’s money manager: In late January, Mohamed El-Erian, head of the $30 billion Harvard Endowment, made a $1.6 billion bet that markets around the world were overvalued, and sold off stocks representing 5 percent of Harvard’s total portfolio. (IHT)
• Forget EMH; try AMH: Adaptive Market Hypothesis
• Fat finger trades – orders made erroneously by
careless traders that cost their employer an arm and a leg – continue
to cause problems, despite rigorous controls and the apparently simple
technology required to stop them. The fat finger points to trouble for traders: The 10 most expensive trading errors.
The Wall of worry continues to build:
• Producer prices unexpectedly jump 1.3%; (Unexpectedly? Don’t headline writers evert get out of the office?)
• Bernanke, Greenspan Disagree on
Impact of Corporate-Profit Peak: The disagreement between Alan Greenspan and Ben S. Bernanke about where the U.S. economy is headed boils down to just one word: profits.For the 81-year-old former Federal Reserve chairman, a peak in profit margins is a sign the economic expansion may be past its prime and the risks of recession are growing. For his 53- year-old successor, the topping out of margins may instead herald better times for U.S. workers as wage increases start to catch up with the five-year boom in corporate profits.
• Does Home Ownership Lead to Increased Unemployment? The Renter’s Manifesto: Big cities can struggle if they overspecialize and then find that times change. Detroit is an example. So is Manchester in Northwest England. Birmingham, in the English midlands, is a different story, a city bustling away, making everything and nothing in particular. As the wise economy-watcher Jane Jacobs once pointed out, Birmingham was thought highly inefficient compared with the specialized mills of Manchester, but when the downturn came, Manchester was devastated and Birmingham kept on chugging along. Chicago, Seattle, New York, and London have similarly reinvented themselves again and again.
• Weakening Housing Market Leads to Rising
Debt Burdens: Center for Economic & Policy Research looks into the impact of slowing housing on consumer debt
• Mortgage woes: More trouble for retailers: Wal-Mart, Kmart, Target and big chains that cater to low-income consumers could take a direct hit from the turmoil in the mortgage market, industry experts warned. And even though most analysts expect the hit to spending from subprime delinquencies to be modest, they say the retail industry may be in real danger of a sales slowdown if credit problems migrate up the ladder from low net-worth consumers to moderate income households.
• Advice for Real Estate Agents The tough residential market means that agents have to smarten up — and become less annoying
• ‘No Money Down’ Falls Flat: Washington Post columnist Steven Pearlstein with a pop quiz on some potentially exciting new products that mortgage bankers have come up with to make homeownership a reality for cash-strapped first-time buyers.
• Subprime Mortgage Woes Are Likely to Spread: Most economic forecasters in a new WSJ.com survey believe recent turmoil in the subprime mortgage market is likely to spread to the broader mortgage market and they expect a widely followed index of home prices to fall this year. But they still think the U.S. will avoid a recession and even a significant rise in unemployment.
• In subprime mess, another dumb theory falls: It seemed so obvious at the time, back at the peak of the Internet bubble seven years ago this month. Profits no longer mattered.
You see, it was different this time. It was a new paradigm. Internet companies were changing the world and old measurements of success, such as profitability, didn’t apply anymore. Until of course, they did. And we’re still living with the fallout from the resulting collapse in Internet stocks and tech stocks in general, seven years later.
• The Ten Faulty Consensus Views about Sub-prime and Soft-Landing Roubini on why the crowd is wrong about Goldilocks.
• In honor of this week’s 2 day FOMC meeting, here are some amusing Fed cartoons.
TECHNOLOGY & SCIENCE
• When Corporate Interests Conflict on Global Warming: It looks like the carbon producers are going to battle the insurers and real estate industry
MUSIC BOOKS MOVIES TV FUN!
• Mike Panzner’s Financial Armageddon: Protecting Your Future from Four Impending Catastrophes is garnering some very strong reviews at Amazon. His financial warnings include derivatives, deficits, pension liabilities and Social Security/Medicare;
• Fitting the melancholy mood above is Jazz great Chet Baker. Check out this unusually long YouTube clip (40 minutes) for the details of his sad sack life story and fabulous trumpet and vocals.
• Hilarious: the people who created sex, drugs and rock and roll, who glorified thug life and guns, are suddenly all concerned with the moral character of America’s teens. Explaining the Crackdown on Student Downloading
That’s all from the NE, where after this weekend’s surprise storm, we are hoping that winter is FINALLY over.