End of April Linkest (Part II)

Yesterday, we looked at the week that was. Today’s linkage will also look at what is upcoming this week.

This week will be about Earnings and Payrolls.  Following that fugly GDP number, Friday’s NFP is taking on greater importace — especially the wage inflation aspect. Consensus is for 120k new jobs (it takes 150k to keep up with population growth).   The biggest drag on job growth has been construction and manufacturing.

Other economic data this week:

Monday: personal income and spending
Tuesday: vehicle sales (consensus is down 3%) and Institute for Supply Management
Wednesday: March factory orders 
Thursday: Q1 productivity, and ISM service-sector activity
Friday: NFP

There are still a slew of earnings coming in, and while the profits have been coming below last quarter’s numbers, they are still way above the lowered 3-4% analysts consensus: Year-over-year, we’re running about 7% so far. On Monday, Verizon reports; Tuesday is P&G and Archer Daniels Midland;  Time Warner reports Wednesday. GM, Starbucks and CBS all report Thursday, and Eastman Kodak finishes the week with results on Friday (there’s speculation EK is a private-equity target).

We get ALOT of speeches this week also: Chairman Ben Bernanke, Treaury Secretary Hank Paulson, St Louis
Fed President William Poole, New York Fed President Timothy Geithner,
Kansas City Fed President Thomas Hoenig — anyone of these gentleman can move the markets, so keep an ear out.

With the Dow up 19 of the
past 21 days, a pullback is overdue — but the timing is anyone’s guess.

Onto the Sunday clicking!

INVESTING & TRADING

• Two views on the market:

–Top market timers staying strong on stocks (Marketwatch)

–Technically Speaking, This Bull Needs a Break: (Barron’s)

• Jeremy Grantham: All the World’s a Bubble : TheStreet.com gave some coverage this week to Grantham’s cautions. "He has upped his
concerns in his latest letter to shareholders. Grantham says we are now
seeing the first worldwide bubble in history covering all asset
classes. Everything is in bubble territory, he says.

Everything." Grantham has studiously avoided television his long career, and on Monday morning, I will be discussing his views on CNBC.

• Mark Hulbert gives some pretty straight forward advice: Do Your Homework (or Buy an Index Fund)  (New York Times)

• Michael Steinhardt laments the state of the investment industry [He] launched his hedge-fund firm 40 years ago and quickly became an industry giant, doesn’t think much of some of the people making huge fortunes in the business today. Back when he started, he says, hedge-fund chiefs were members of "a very limited, elite group that had mystery and excitement and élan. Now, it’s all about making money for the managers."  (Barron’s)   

• Has Amazon.com fixed its profitability problem? The shares of the online retailer had a boffo week, gaining 40% in two days (Marketwatch)      

• Boom Time: Russia’s Abundant Oil and Gas Reserves Are Powering up the Economy

• The South Korean miracle: Which developed country’s stock market currently trades at a 10.7
price-to-earnings ratio, despite sporting a 4.3% inflation-adjusted
growth rate for its gross domestic product? (Marketwatch)

• Dollar Touches a New Low Against Euro       

• China Tells Banks to Set Aside More Money as Reserves: China ordered banks to set aside more
money as reserves for the seventh time in 11 months to try to
prevent the world’s fastest-growing major economy from overheating. Lenders must put aside 11 percent of deposits starting May
15, up from 10.5 percent, the central bank said on its Web site.  (Bloomberg)

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ECONOMY

The Wall of worry continues to build:

• I asked readers what sectors of the economy are being impacted by the housing slowdown, and you folks came up with quite a list: Housing Slowdown Sector Impact. Fascinating stuff.

• The U.S. Economy: Prospects and a Puzzle Revisited:
SF Fed President Janet Yellen made a speech recently, and made the most
explicit acknowledgement of the economic deceleration and its potential
impact of any Fed member; I guess the business cycle hasn’t been
repealed. (San Francicso Federal Reserve)

• GDP Data Release (and primer)  Want to know how GDP is assembled? A quick primer 

• Fitting Growth Data Into the Unemployment Puzzle:
With the economy growing so slowly, why is unemployment falling?
Explanations range from measurement problems to the peculiar behavior
of construction jobs to the possibility that productivity growth is
easing. (free WSJ)  See also Output and jobs pose statistical mismatch (FT)
    

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HOUSING

• U.S. House Prices Slide As Property Glut Grows: Tighter credit and a growing glut of properties are depressing
an already weak U.S. housing market, wrecking the industry’s hopes for an early
rebound. That leaves buyers in a strong position to negotiate for
bargains during the spring home-shopping season, the busiest time of the year
for housing sales.
(Real Estate Journal)

• US new home market may take til 2009 to rebound
Recovery of the U.S. market for new homes could take another year if
trouble in the adjustable-rate subprime mortgage market spreads to
other types of residential lending, credit-rating agency Standard &
Poor’s said on Monday (Reuters)   

• ‘Liar Loans’ Fuel Bust With $1 Billion Fraud:
Cheating on mortgage applications is so widespread and so seldom
punished that it’s fueling an increase in foreclosures that will
prolong the housing slump, said Robert W. Russell, counsel to the
director of the Office of Thrift Supervision, which oversees savings
and loans. (Bloomberg)

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POLITICS/TAXES

• Homeowners Wage a Tax Rebellion: "Falling home prices and rising property-tax assessments are fueling a grass-roots tax rebellion . . . Tax assessments didn’t keep pace with soaring property
values in recent years. Now, assessments are catching up at the worst
possible time, just as property prices soften (free Wall Street Journal)

• Congress Wrangles Over Bush’s Expiring Tax Cuts: A surprisingly blunt assessment from  Bloomberg’s John Berry: "Republicans have only themselves to blame,
because the expiration dates were set originally to mislead the
public about the amount of revenue loss involved. Of course, from
the beginning the plan was to argue that letting the cuts expire
would impose tax increases that would harm the economy and cost
jobs…"

 

 

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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)

 

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MUSIC BOOKS MOVIES TV FUN!

• Weekend Jazz: Dexter Gordon

• 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 your weekend twofer. Let us know if you prefer this format to one longer fest, by sending an email here, and if I can pick out your responses from amongst the spam, we’ll see if we can implement your wishes.

Enjoy what’s left of your weekend — its Sopranos and Entourage night!