Four straight weeks of up! The Dow notched several records, advancing 19 of the past 21
sessions — one of the strongest streaks seen since 1929. The Industrials and the Nasdaq each gained 1.2% for the week, while the S&P500 tacked on 0.7%. The Russell 2000 continues to lag, barely notching into the green this week. Depending upon Mondays close, monthly gains for April may be the for the major indices in 5 years.
There is some speculative juices running: The Semis grabbed ~9% in two weeks, while Amazon tacked on 40% — in two days!
Barron’s Trader column notes that "institutional market confidence stands at
the highest level since 1990, according to a Yale School of Management
survey that asked respondents to gauge the odds of a market crash in
the next six months. Meanwhile, the gap between institutional and
individual confidence has widened to a historic chasm. This is "the
polar opposite of what prevailed late in the tech-bubble years," notes
Douglas Ramsey of the Leuthold Group."
Each week, I try to make the fest a balance: depth versus brevity, eclectic topics versus relevance. This week is an experimental 2 parter: Today, we will go over the week that was, and tomorrow, we will look at the upcoming week that will be. If y’all like this, we may make it a regular feature.
Let’s get clicking!
INVESTING & TRADING
Some looks at the record setting Dow this week;
• Finding the Meaning in Dow 13,000: The stock market reached record highs this past week
even as the government reported that economic growth slowed to its
weakest pace in four years. Better-than-expected corporate earnings sent the Dow
Jones Industrial Average past the 13000 mark for the first time on
Wednesday. And reports that corporate earnings will improve as the year
continues contributed to easing concerns about a slowdown that emerged
when stock markets plunged in late February. (free Wall Street Journal)• Bulls snorting over stocks, but not yet stampeding (Marketwatch)
• The Dow May Be at Its High, but Its Performance Is Still Lacking: Does that mean the stocks in the Dow have done better than those in the S.& P. index since the market peaked in 2000? Actually not. As can be seen in the accompanying charts, only half of the stocks in the Dow are higher than they were back then, while the number of rising stocks in the S.& P. is triple the number of losers. (New York Times)
• One of the most talked about stories this week was the New York Times piece on the compensation for some top performing hedgies: Top Hedge Fund Managers Earn Over $240 Million
• Citigroup: Time Break Up GE: General Electric Co. shares staged
their biggest rally in more than four months after Citigroup Inc.
analysts said the company should spin off NBC Universal, GE Money
and the real-estate division. "GE’s size and complexity is working against investor
interest in the stock and has contributed to further valuation
erosion,” the analysts wrote. (Bloomberg)• The Real-Estate Blame Game: The unlikeliest victims of the housing slump.
• Five Reasons to Think the Pound Will Get Stronger: You need to be at least 40 to
remember when the pound regularly traded at more than $2. It broke through that point last week for the first time
since the U.K. was thrown out of the European exchange-rate
mechanism in 1992. Most people view a $2 pound as a historical aberration and
assume it is about to slide again, just as it has in the past. Think again. The British currency may go even higher —
perhaps to $2.50. (Bloomberg)• DeCoupling US and Global Markets?
• World passes by: Toyota has overtaken General Motors as the world’s largest automaker, selling the most cars in the first quarter. This news is significant because it exemplifies the waning role of the U.S. in the world as globalization takes hold. And it further highlights the long-term payoff of an ethically driven company (Marketwatch)
ECONOMY
The Wall of worry continues to build:
• U.S. Economic Growth Is Slowest In 4 Years Amid Housing Slump
(if no WSJ, go to GDP = 1.3%)• Psst: Want to buy a better credit history?: Companies are selling or renting access to improved credit by adding
low-scoring borrowers as authorized users of credit cards belonging to
those with stellar credit. (Star Tribune)• Consumers continue to support growth: Consumers continued to spend as durable goods
purchases rose 7.3 percent leading to an overall increase of 3.8
percent in personal consumption expenditures. Consumption contributed
2.66 percent to overall GDP whereas private investment took away 1.06
percent, primarily a result of the housing slowdown.
HOUSING• Home Equity Stalls: After years of piling debt on their homes, Americans are becoming more cautious about using them as a piggy bank. A cooling housing market and higher interest rates
have made homeowners more reluctant to tap the equity they may have
built up in their residences. The amount borrowers owe on their
home-equity lines of credit has slipped in the past six months, to $561
billion at the end of March, the first such decline since 1999,
according to new data from Equifax Inc. and Moody’s Economy.com Inc. (free Wall Street Journal)• More on Mortgage Equity Withdrawals and Consumer Spending
• Subprime assault on southern California: Far away from the sun-kissed beaches and palm trees that make up
southern California’s idyllic coastline, trouble is brewing in the
Inland Empire (FT)
TECHNOLOGY & SCIENCE
• Dell’s Founder Is Rethinking Direct Sales: Michael S. Dell, the chairman and chief executive of Dell, who built his business by selling direct to his customers, is now thinking about changing the way the company markets its computers. “The direct model has been a revolution, but it is not a religion,” Mr. Dell wrote in a memorandum sent on Wednesday to 80,000 Dell employees. (New York Times)
• Experts may have found what’s bugging the bees — a Fungus gets the blame
• Vista, Office ’07 drive up Microsoft’s Q3 revenues: The above numbers reflected a previous deferral of $1.67 billion of revenue and operating income, $1.14 billion of net income and $0.12 of diluted earnings per share, primarily related to the technology guarantee programs for Windows Vista and the 2007 Microsoft Office release. Excluding those deferrals would bring revenue growth down to 17 percent . . ."
• Quantum physics says goodbye to reality: For the Physics heads out there, consider this quantum concept: Recent experimentation seem to support the idea that "reality" does not exist when we are not observing it.
• Lawmakers propose reversal of Net radio fee increases
"You can’t put an economic chokehold on this emerging force of
democracy," Inslee said in a statement e-mailed by a spokeswoman.
"There has to be a business model that allows creative Webcasters to
thrive and the existing rule removes all the oxygen from this space." (C/Net News.com)
MUSIC BOOKS MOVIES TV FUN!• Can Music Survive Inside the Big Box?: In past decades, deejays and music critics helped shape musical trends. Today, many music industry executives agree, the big boxes have become the new tastemakers. Even as compact disc sales fall, their choices dictate which CDs are widely available on store shelves across the U.S. Big boxes are the industry’s biggest distribution channel — and the rock, hip-hop, jazz and classical music titles they choose not to carry face drastically reduced chances of reaching mass audiences. (free Wall Street Journal)
• Ex-C.I.A. Chief, in Book, Assails Cheney on Iraq:
George J. Tenet, the former director of central intelligence, has
lashed out against Vice President Dick Cheney and other Bush
administration officials in a new book, saying they pushed the country
to war in Iraq without ever conducting a “serious debate” about whether
Saddam Hussein posed an imminent threat to the United States. (New York
Times)• How the CIA Used a Fake Sci-Fi Flick to Rescue Americans from Tehran (Wired)
• And what has to be my favorite headline of the week: Why can’t gay dwarves get married in Middle-earth?
That’s part I — tomorrow, we look at the coming week, including a rounduup of the Sunday papers. You stay classy, San Diego!
I like the seperation.
What do you think of the new Lee Iacocca’s books?
“The stock market reached record highs this past week”
There has been a lot of foreign money coming to the US stock market lately, mostly foreign institutional investors. I think, they see the dollar to be undervalued relative to other currencies. (“Let’s face it, the dollar has had a good sell-off, but in terms of valuations it is now looking to be one of the cheaper currencies out there,” says Roddy Macpherson, investment director of global strategy at the UK-based Scottish Widows’ Investment Partnership, which oversees $200 billion of funds. Macpherson says he reckons the dollar is around 20 percent undervalued against the British pound and the euro.” From Reuters)
I agree, the dollar decline is overdone and it is mostly political. Yes, the US has many problems but the EU has many problems too, chronic low growth and deficits. Personally, I think the dollar decline is mostly political. We pay approximately $600 billion a year for oil to our “friends”, and for political reasons these “friends” constantly sell the dollars and buy Euros. This constant pressure on the dollar pushes it lower and makes others to diversify, which feeds on itself and supports further dollar decline. (In addition, to the Fed printing too much money and other factors like mafia preference for Euro 500 bills vs. USD 100 bills – easier to store and transport dirty money)
Developing countries scramble to secure oil supplies.