It was a wild and wooly week, partially rescued by Friday’s snapback from Thursday’s weakness.
The Dow fell 0.4% on the week, while the S&P 500 gave up 0.5%, unable to notch a new record on a closing basis.The Nasdaq lost but a single point (0.05%) for the week. The big loser was the Russell 2000 index of small cap stocks, falling 0.8%. Gold gave up a percent, while Crude rallied 0.4%.
Barron’s Trader column points out that "while the market’s uptrend remains unscathed, its quality has deteriorated. The swath of stocks broaching new peaks has narrowed. The Dow transportation average has been sluggish while brokerage stocks have struggled. The S&P 500 is running 9% ahead of its 200-day moving average, a chasm that has preceded prior pauses."
Get your suntan lotion out, its a special Memorial Day weekend edition of the linkfest:
INVESTING & TRADING
• Treasury 10-Year Yield Rises to Almost Four-Month High on Fed: Treasury 10-year note yields rose to
the highest level since January as traders reduced the odds of an
interest rate cut by the Federal Reserve this year. The 10-year note’s yield was higher than that of the two-
year security for the first time in three weeks on signs of
resilience in the U.S. economy. Richmond Fed President Jeffrey
Lacker said yesterday it’s the central bank’s responsibility to
curb inflation and it would be a mistake to rely on slower growth
to stem price increases. (Bloomberg)
• There were so many China links this week, we had to give them their own page. We’ve Gone China Crazy!
• ‘The Apprentice: Omaha Edition,’ Starring Warren Buffett: Then I found out that the 76-year-old Mr. Buffett had asked for
applications from people wanting to become his successor. Many hundreds
applied. So at the annual shareholders’ meeting in Omaha this month, he
announced his new search strategy: rather than decide from old-style
résumés and interviews, he planned to choose three or four top
candidates and then give each $5 billion or so to manage and see how
they do. The winner gets the job. When I heard about this, the
romance died. For all of Mr. Buffett’s reputation as the ultimate
nonmutual fund, he may have just fallen into one of the biggest mutual
fund traps of all — forgetting how incentives affect fund managers’
behavior. (New York Times)
The Wall of worry continues to build:
• Greenspan can’t stop blabbing: The former Federal Reserve Board chief, for 16 years the epitome of
economic discretion, offering only mumbled (and sometimes jumbled)
assurances to weighty questions about market bubbles and global
financial risk, is suddenly shouting from the rooftops. It seems that a week can’t go by without Greenspan issuing some dire
warning about the markets or global economy, typically sending stocks
into a brief tailspin until investors remember that he’s not the Fed
chief anymore. Unlike the mythical Cassandra, doomed to have nobody
believe her predictions, people actually believe Greenspan. (Marketwatch)
• U.S. Economy’s Mixed Vital Signs Flummox Experts: U.S. economic growth has slowed to a
crawl; the stock market is soaring. Housing is in a recession;
construction employment has yet to show any effect. Employment
growth is decelerating; weekly jobless claims have tumbled in
the last month. That’s just a short list of the U.S. economy’s conflicting
vital signs, serving to keep forecasters off balance and Federal
Reserve policy makers at bay. (Bloomberg)
• Demand and Costs Rise for Best Cuts: At $42, a nicely charred 16-ounce slab of prime boneless strip loin might not seem like much of a bargain now, but it could soon. Over the past two months or so the cost of producing beef and the demand for it have risen so much that prices are soaring and the supply of top quality beef has dropped. Customers at steakhouses and markets will see the effects in coming weeks if they haven’t already. (New York Times)
• Pirates and Sanctions: (NYT)
• As Condos Rise in Florida, Investors Try to Flee: As dozens of condominium towers conceived during Florida’s real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits. “Motivated” sellers are flooding online forums like Craigslist with advertisements for condo units still months or years from being finished. And lawyers have been inundated with calls from people hoping to avoid closing on units they bought during the speculative craze of 2004 and 2005. (New York Times)
• Not Enough Pain from $3 Gas: Gasoline prices have surged more than 20 cents in recent weeks to a
record nationwide average of $3.10 per gallon, surpassing the previous
record of $3.07 per gallon set in September, 2005, according to the
Energy Information Administration. As gas prices rise, owner loyalty in
the large pickup and midsize and large utility vehicle segments drops,
according to data gathered between February and April of this year by
Power Information Network (PIN), an affiliate of J.D. Power &
• Congress Fails Economics 101, passes bill to allow USA to sue OPEC. Seriously. You couldn’t make this stuff up if you tried.
• World’s First Air-Powered Car: Zero Emissions by Next Summer: India’s largest automaker is set to start producing the world’s first commercial air-powered vehicle. The Air Car, developed by ex-Formula One engineer Guy Nègre for Luxembourg-based MDI, uses compressed air, as opposed to the gas-and-oxygen explosions of internal-combustion models, to push its engine’s pistons. Some 6000 zero-emissions Air Cars are scheduled to hit Indian streets in August of 2008.
TECHNOLOGY & SCIENCE
• Tired of all the fawning media coverage of Google? Try this Bob Cringely piece: The Final Days of Google
• The man who owns the Internet: Kevin Ham is the most powerful dotcom mogul you’ve never heard of, reports Business 2.0 Magazine. Here’s how the master of Web domains built a $300 million empire.
• New search functions includes photos, blogs, video, music.
Despite the 90 degree weather in NYC yesterday, the beaches were windy and cold in the Hamptons — so don’t feel you missed much if you were stuck on your trading desk. Weather forcast is mixed, so I am loaded up with books (Pop!, Black Swan, New Ideas from Dead CEOs) and DVDs (Larry Sanders Show, The Departed, Stranger Than Fiction, Smokin’ Aces, Music & Lyrics, Night in the Museum)
Enjoy your weekend!