It was a mixed week for the Markets. The Dow rose for a sixth straight week, gaining half a percent. Its up just under 7% for the year. Over the past 29 days, the Dow has gained 8.6% in 29 days
The Standard &
Poor’s 500 was flat, and is 1.4% from its March 2000 all time high.The Nasdaq Comp actually fell 0.4%, while the Russell
2000 also slipped 0.4% (is that even allowed?).
On Wednesday, the Fed made it clear that Inflation remains its primary concern, and the odds remain low for a rate cut anytime before September. On Friday, flat core PPI and awful Retail data made traders forget the previous sentence, with rate cut hopes powering the Dow to a triple digit gain for the day.
Earnings season is nearly over (more on this tomorrow), and M&A activity shows no signs of slowing anytime soon.
You have two things to do this weekend: Send mom flowers, and get clicking!
INVESTING & TRADING
• A superbear turns bullish We saw something that is extremely rare [on April 20 and April 25], in fact I can’t remember ever having seen this before. What I’m referring to is that on those two dates all three Dow Jones Averages — Industrials closed at simultaneous historic highs. To me, a fellow steeped in Dow Theory for over half a century, this was like a clap of thunder… My take on the situation is that the stock market (and the Dow Theory) told us that an unprecedented world boom lies ahead." (Marketwatch)
• Another Bear, not so much: Street Insight’s own Doug Kass offers up 15 Reasons Stocks Should Be Falling (TheStreet.com)
• M&A Frenzy Question: Why now? Money was just as cheap 3 years ago, while acquisition targets were much cheaper then . . .
• Munger Speaks on Berkshire’s Success: "I didn’t set out in life to become the assistant leader of a cult." That is how Charlie Munger welcomed shareholders to the 2007 Wesco annual meeting. The cult, of course, is the loyal throng of value investors that invade both Omaha, Neb., and Pasadena, Calif., each spring to learn at the feet at Warren Buffett and Charlie Munger, and as Munger noted "to leave a little wiser than they came." (Morningstar)
• Where Have S&P500 Returns Come From? Dividends, Inflation and Capital Gains — in that order!
• Why investors are so glum with the market so high: With the Dow Jones Industrial Average flirting with record highs — and the broader Russell 1,000, 2,000 and 3,000 also at historic peaks — investors should be positively giddy. Instead, they appear to be glum, their mood dictated by concerns over rising gas prices, falling home values, fluctuations in currency values and worries about inflation. (Marketwatch)
• What are the odds of the Dow being up 24 days of 27?
Over the course of 111 years — 30,000 trading sessions — since the
Dow was created in 1896, Rudi Fahlenbrach, an assistant professor of
finance at Ohio State University’s Fisher College of Business,
caclualtes the odds are between one and two times in an 111-year period
— exactly what has happened. (Marketwatch)
The Wall of worry continues to build:
• More on NFP: More Recognition of Disbelief BLS Birth Death adjustment comes under attack by many ddifferent sources
• Economy Is Clawing Back, but Not Much The worst of the economic slowdown has passed, private
economists said in the latest WSJ.com forecasting survey. But they
don’t see any reason to expect a significant acceleration. By a more than 5-to-1 margin, the economists said they
believe the first quarter’s 1.3% growth — the weakest in four years —
marked the low point in the slowdown that gripped the economy much of
last year. However, they expect growth to stay below 3% into early
2008, leaving 2007 on track to have the slowest economic growth since
2002. (free Wall Street Journal)
• The Tooth Fairy index is off 15% this year! (ABC)
• The Fed Has a Target. It’s the Unemployment Rate: "It makes me wonder why the Fed bothers to employ so many
economists,” says Ian Shepherdson, chief U.S. economist at High
Frequency Economics in Valhalla, New York. "They only need one
guy, half a day a month, to monitor the unemployment rate.” (Bloomberg)
• The Missing Link to Global Rebalancing
Financial markets are giddy over the prospects that a $51 trillion
global economy has once again displayed Teflon-like resilience in
coping with a major problem. There are signs that a benign global
rebalancing could well be at hand. A downshift in the US economy has
been largely offset by improved economic conditions in Europe and
Japan. Meanwhile, the dollar has resumed its five-year downward
trajectory – tilting the world’s relative price structure against the
mother of all external deficits. My advice is to keep the champagne on
ice – there is a critically important piece to the global rebalancing
puzzle that has yet to fall into place. (Morgan Stanley)
• Home Prices Fall in Rich New York Suburbs Once Immune to Slump: The U.S. housing slump has hit New York City’s richest suburbs. Wealth and excellent credit have until now spared bedroom communities in New Jersey, Connecticut and New York’s Westchester County from declines in home prices. Now the tightening of credit in response to rising subprime defaults has disrupted the real estate food chain, bringing the national housing slump to Manhattan’s doorstep. Prices fell as much as 18.8 percent this year in 15 of the 24 areas in which data was collected. (Bloomberg)
• Supply of Homes Continues to Grow The supply of houses and condominiums available for sale continues to grow quickly in much of the U.S., reflecting weak sales. The number of homes listed for sale in 18 major metropolitan areas at the end of April was up 7% from March, according to data compiled by ZipRealty Inc., a national real-estate brokerage firm in Emeryville, Calif. The data cover listings of single-family homes, condos and town houses on local multiple-listing services. The increase was above the seasonal norm. Over the past 22 years, home inventories nationwide have increased an average of 4.5% in April from March, according to Credit Suisse Group. Spring is the busiest time of year for home shopping, as families with children try to get settled ahead of the next school year. Also, Housing prices are rising in some areas of the U.S. that missed out on the boom. (Real Estate Journal)
• Toll cites trickle-up effect of subprime: Toll Brothers Inc. said Wednesday that it doesn’t expect to meet its full-year profit outlook and that more stringent lending standards as a result of problems in subprime mortgages are reverberating in its own luxury-home market. (MarketWatch)
TECHNOLOGY & SCIENCE
• The Secret of Apple Design The inside (sort of) story of why Apple’s industrial-design machine has been so successful. (MIT Technology Review)
• You’re a Nobody Unless Your Name Googles Well
In the age of Google, being special increasingly requires standing out
from the crowd online. Many people aspire for themselves — or their
offspring — to command prominent placement in the top few links on
search engines or social networking sites’ member lookup functions.
But, as more people flood the Web, that’s becoming an especially tall
order for those with common names. Type "John Smith" into Google’s
search engine and it estimates it has 158 million results. (free Wall Street Journal)
• Enter your zip code, and MSN Auto will show you a map of Gas Station prices in your neighborhood, huighlighting the cheapest (MSN)
• Incredible Tornado Video from May 4, 2007 Ellis County, Oklahoma
MUSIC BOOKS MOVIES TV FUN!
• Weekend Jazz: Gerry Mulligan: "the most influential baritone saxophonist in jazz."
• How to Slow Down a Ferrari: Buy It: How long should the world’s super-rich have to wait before they can buy a Ferrari? The answer has as much to do with how luxury-goods companies create an aura of exclusivity as it does with the global economy’s shifting winds minting more millionaires in places like China, Russia and the Middle East. (free Wall Street Journal)
• Quiz: Do You Have a Bulls**t Job? (CNN Money)
That’s all from the NorthEast, where the last few Sopranos are slowly slipping away. I don’t really mind — so long as long as Entourage remains as good as it has been!