March Fest!

After last week’s mayhem, investors breathed a sigh of relief. The past 5 days saw some swings, but not too much trouble. Markets gained ~1% — most of it on Tuesday — when overseas markets rallied strongly and the US followed suit.

By the numbers, the Dow was up 1.3% on the week — off only 4% from the all-time closing
high it set last month (although quite a few traders were heard to complain it didn’t feel that way). The Standard & Poor 500 saw a 1.1% rebound from the prior week, while the Nasdaq gained 0.8%, lagging its brethren. The Russel2000 — a big loser the prior week — added just under 1.3%

Barron’s Trader column points out that "Small-caps outperformed large, especially on Friday,
suggesting that investors’ risk appetite hasn’t disappeared. Still,
market sentiment remains skittish, following late February’s huge
selloff."

Economic data for the week was mostly soft: BLS said the U.S. economy added only 97,000 jobs in February; ISM non-manufacturing index
fell to 54.3 from 59; wholesale
inventories rose; Retail sales in February were below expectations.

No worries, mate — we got your back. Its linkfest time:

INVESTING & TRADING

• 7th anniversary of a painful lesson: It was on March 10, 2000, that the Nasdaq Composite index closed at its all-time high of 5,048.62. By the time all the air in the Internet bubble had been let out, some 2-1/2 years later on Oct.9, 2002, that benchmark stood at 1,114.11 some 78% lower than where it stood at the top.
That drop was so huge, in fact, that even with the Nasdaq’s 114% gain since that bear-market low, it still stands today nearly 53% lower than where it stood prior to the bubble bursting. (Marketwatch)

• Last week, a Barron’s article by Bill Alpert (buried on page 39) discussed what may be the next great Wall Street Scandal: Analyst Recommendation Back Dating.(If no Barron’s, go here). According to the professors who have studied the data, It seems that the I/B/E/S analyst history may be subject  to change, by the very same analysts who made the original recs. The Profs identified what they describe as 54,729
non-random, ex-post changes out of 280,463 observations — or ~19.5% of analyst recs. Overall, these post-hoc changes made Wall Street’s stockpicking record look better.

–A Non-Random Walk through IBES analyst ratings
–Mysterious Changes in Key Wall Street Data (Barron’s)
–The Coming Wall Street Scandal  (Slate)

• Paul Kasriel of Northern Trust asks What Does Shrinking Equity Supply Mean? So far, its been a huge boon to prices

• Barron’s online: Fasten Your Seatbelts, It’s Going to Be a Bumpy Ride (If no Barron’s, go here)

• Bogle Sees Tough Times Ahead: Vanguard Group founder John Bogle doesn’t believe you
can forecast the stock market’s short-term direction. But he’s done a
pretty good job of proving himself wrong. He was bearish at the market peak in 2000 and bullish
at the 2002 market low. Unnerved by the recent stock-market turmoil?
Here comes Mr. Bogle, warning investors that modest returns may lie
ahead. (free WSJ)

• Is emerging market contagion back? Yes and no: Contagion? No, Wake-Up Call (BusinessWeek)

• Fascinating trivia about the S&P500 on its 50th Anniversary

• Sentiment Watch: As Doubts on Economy Grow, Stock Investors Stay Upbeat; Also, Advisers’ hasty retreat may be a good sign (WSJ/Marketwatch)

• George Soros interview
The legendary investor discusses the Yen Carry Trade, the Housing
situation, China, Iraq, and the role hedge funds and private equity
funds play today.  (FT)

• What do large 5-day declines mean for subsequent market performance? (Answer: It depends on proximity to highs and market internals)

• ‘Broken Deals’ Become Rockets (free WSJ)

• It doesn’t take much selling to bring the Bear-market funds’ out of hibernation, but I was surprised to learn that there is close to $8 billion invested in bear funds. (Marketwatch)

• Whenever I think I’m being too biased about something, especially in my own technical analysis, I perform a simple, but effective trick: I just filp the chart and see if my analysis would be the exact opposite. In other words, if I’m bullish on a chart and I flip it, frankly I should be bearish about it and vice versa. See what you think of this example, in Flip The Chart

• SEC suspends trading of 35 firms tied to ‘pump-and-dump’ spam (ComputerWorld)

• Cody Willard gets Wallstripped!

 

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ECONOMY

The Wall of worry continues to build:

• All is fine! According to the Goldilocks crowd, the Economy is just fine. The only problem is that they have been wrong about Corporate Profits, GDP, Job creation, and Tax Reciepts . . .

• How Alan Helped Ben: What does Federal Reserve Board Chairman Ben S. Bernanke think of his illustrious predecessor now? For weeks, Bernanke has been reassuring Washington and Wall Street that the economy is healthy and inflation pressures are diminishing. Yet Alan Greenspan comes along and helps ignite a global market firestorm by talking about the risks of recession in America. Is Bernanke feeling dissed by a living legend? (BusinessWeek)

• Bull Bear Video Debate:

–Malpass of Bear Stearns Sees `Solid’ U.S. Economic Growth     
–Hatzius of Goldman Sachs Expects `Below-Trend’ U.S. Growth

• NFP Day (plus, ADP update) Soft Job creation was not a big surprise — but improvements to ADP’s forecasting was. Can private data  gatherers best government and academic sources?

 • Ten Observations on the Coming Financial and Economic Hard Landing. Nouriel makes me look (heh heh) downright cheery! (RGE)

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RETAIL/SHOPPING

• Only one post on Retail this week — but its the only one you MUST read: Through The Retail Looking Glass

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HOUSING

• One word: Suck

• Realtors Are Sick of NAR "Spin": A growing number of Realtors in Florida are frustrated with the state and national Realtors groups’ efforts to ‘spin’ the market as one that is strengthening and where home prices are stabilizing. Many (though probably not yet most) Realtors are frustrated by customers who continue to list their homes at price levels that are ‘unrealistic,’ and as a result, sales volumes – and thus commissions – continue to remain depressed. (Palm Beach Post)

• Subprime Wreckage As fallout spreads from soaring defaults on riskier home-mortgage loans, some big investors see a recovery coming and are preparing to increase their bets on the so-called subprime market. Others already have reaped big gains wagering against it. (free WSJ)

• Subprime Defaults Prompt Calls For Rules to
Protect Borrowers As more homeowners fall behind on their mortgage payments, the debate is heating up over whether lenders should be required to ensure that the loans they issue are suitable for their customers. Bloomberg’s Caroline Baum is skeptical:  As Housing Goes Bust, Lenders Become Predators? (free WSJ)   

• Markit is a good source of subprime mortgage trading data: Markit ABX

 

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FEDERAL RESERVE

For a non-FOMC week, the Fed was sure front and center:

• Fed Warned on Foreclosures as Mortgage Growth Cools

• In case you forgot why some people hold Alan Greenspan responsible for the Housing mess, the wayback machine reminds us why: Quote of the Day – Alan Greenspan on SubPrime, I/O and other exotic mortgages (Doh!)   

• Bernanke Says Fannie, Freddie Need to Reduce Assets
Fannie Mae and Freddie Mac, the largest sources of money for U.S. home
loans, should sell most of their $1.4 trillion in assets to refocus on
homeownership among low-income Americans, Federal Reserve Chairman Ben
S. Bernanke said. The companies could destabilize financial markets
should they fail to hedge their assets against risks like shifts in
interest rates. (Bloomberg)

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WAR/LAW/POLITICS

• Niall Ferguson’s Wake-Up Call FERGUSON IS FASCINATED by what he calls the "paradox of diminishing risk in an apparently dangerous world." By that, he means ebullient global stock markets and record-tight yield spreads between risk-free U.S. Treasuries and junk bonds and emerging-market debt. He also cites declining volatility in stock, bond and foreign-exchange markets, and an abiding faith in the ability of the Federal Reserve and other central banks to rescue the investment community from any potential financial crisis. (Barron’s)  Meanwhile, Syria deploys thousands of rockets on Israel border   

• Unlearn:  Trial’s Lesson: Just Take the Fifth I guess that’s one lesson you could have learned, especially if you are suffering from blunt head trauma or have some form of diminshed mental capacity. The rest of us with fully functioning brains might have learned a different lesson: Don’t ever bullshit the FBI, and never lie under oath to Federal prosecutors. (free WSJ)

• Gonzales Defends Move to Fire Attorneys, Denies Political Role  The Justice Department claimed that 7 US Attorney’s who were fired were performance related — but a Wall Street
Journal review of internal Justice Department documents reveals this to be false. This is a scandal with legs, and before its over, someone will be disbarred. (free WSJ)

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TECHNOLOGY & SCIENCE

• It was an eventuality you knew was coming: YouPorn! The latest imitator of You Tube is precisely what it sounds like: a Triple X version of YouTube. They cater to all those people who have been getting busy videotaping themselves, well, getting busy.
(link is safe for work, but after that, ou are on your own!)

• Music’s New Gatekeeper: Apple — now one of the largest sellers of music in the U.S. — offers home-page placement in exchange for things such as exclusive access to new songs, special discount pricing or additional material such as interviews with stars. Most other big retailers, digital and physical, also seek exclusive offerings, but Apple is especially aggressive and has outsize clout when it comes to the slightly out-of-mainstream music it often emphasizes. (free WSJ)

• The 50 Most Important People on the Web (PC World)

• Weighing the Results of Popular Diets A government funded study determien which popular diet is most effective — the results will surprise you (video)

• If you travel a lot, this is for you: The definitive guide to US airport wireless connections and free airport wifi

• The annoying tech/retail CEO that won’t go away:  Revisiting Overstock.com and Utah (NYTimes)   

• Don’t Get Caught In a Losing Battle Over DVD
Technology 

• How To Avoid A Heart Attack (Forbes)

• Apartment Transformed into Star Trek Shrine. Need I even say it? Owner’s sex life transformed into a distant memory

• Bioluminescent squid

• The Lord’s Encyclopedia:
Christian fundamentalists in the US have launched two online
encyclopedias modelled on the Wikipedia format. Conservapedia and
CreationWiki aim to explain the world from a creationist perspective.
They make entertaining reading.
 

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MUSIC BOOKS MOVIES TV FUN!

• Weekend Jazz with Thelonious Monk: Monk was a three way genius: As a composer, as a jazz pianist, and as
an improvisationist, he was without peer, and shaped the future of
Jazz. 

• Vanguard founder and tireless index promoter John C. Bogle pens "The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns"  Bogle has an OpEd in the WSJ this week, touting Indexing over even Value Strategies.

• The Best Burger in America: You can quibble with the list, but it a worthwhile discussion. When in NYC, check out this list: Best Burgers in NYC   

• Fun!  Fish body/face-art

• Astonishing use of data:  A gorgeous depiction of all the flights over the US in a 24 hour period  Stunning.

That’s all from the Northeast, where we may possibly have put this Winter behind us. With the cold snap behind us, the crocus shoots are coming up, and a 50 degree week lay ahead of us. Good riddance !