Anniversary Crash Linkfest: Week in Preview

Yesterday, we looked at the week that was; This morning, we preview the coming week.

Dollar_iIts a relatively light week, with things pretty quiet until Wednesday, when we get Mortgage Purchase Applications and Existing Home Sales. Expectations are modest for each.  On Thursday, will see data on Durable Goods Orders and New Home Sales, with both expected to be soft.

Last week saw a surprisingly large rise in weekly jobless claims. We’ll be watching this data release Thursday morning to see if last week’s jump was an aberration. Friday is Consumer Sentiment.

An avalanche of earnings reports are coming this week, including a half dozen Dow components. On Monday, Apple kicks us off with high expectations for iPod and Mac profits. Texas Instruments also reports Monday, along with drug makers Merck and Schering-Plough. Bristol-Myers Squibb reports later in the week. is out on Tuesday. Merrill Lynch reports Q3 earnings Wednesday, Microsoft reports Thursday.

We hear from quite a few Housing firms: On Tuesday, Centex reports, followed by Pulte Homes and Ryland Group Wednesday. Countrywide Financial is expected to report a big loss Friday; its CEO, Angelo Mozilla is under increased scrutiny for changing for his rather advantageous changes in his stock sale program.

Lots of aerospace and defense report this week:  Lockheed Martin,
Boeing, General Dynamics and Northrop Grumman, Raytheon and L-3
Communications Holdings all report earnings this week.

A few transports also release earnings this week: the world’s largest package carrier, United Parcel Service, releases reports earnings Tuesday, along with Burlington Northern Santa Fe,  UA (parent of United Airlines), and JetBlue Airways. Norfolk Southern reports Wednesday. US Airways is out on Thursday.

Other Dow components reporting include American Express, AT&T, DuPont and Dow Chemical.

Its Sunday morning, and I am heading to the North Fork’s wine country — no time to dawdle!   Let’s get clicking:


S&P 500 earnings likely to turn negative: Thomson Financial:
Third-quarter earnings of S&P 500 companies have "a good chance" of
turning negative for the first time in five years on Thursday, after
factoring in Wednesday’s profit warnings from a slew of energy stocks,
Thomson Financial said.  (Marketwatch)   

Clean technologies propel venture capital funding: Shrugging off credit-related economic woes, venture capitalists bet heavily on new companies in the third quarter, driven by opportunities in clean technologies, software and biotechnology.But Washington companies didn’t attract as much cash as in the recent past, as new funding for local biotech plummeted. An Ernst & Young/VentureOne report ranked the state in eighth place by dollar amount received, down from third in the second quarter.The VentureOne report said the venture-capital amount invested this quarter, at $8.07 billion, is the highest since the first quarter of 2001, during the tech bubble.  (Seattle Times)   

Wall Street Requiem: The big investment banks, loaded with dangerous amounts of debt, are facing their own version of a subprime slump. Can they all survive?  (Portfolio)   

• Paul notes: Institutional investors will spend a projected $1.1 billion on research technology globally by 2010

Are oil prices at their highest?:
Pinpointing the all-time inflation-adjusted record for oil prices is
nowhere near as exact as it might seem. Last week the roller coaster of
crude oil prices climbed to $89.47 on Thursday and surpassed $90 by a
few cents in trading Friday, then dipped to close out the week at
$88.60 a barrel on the New York Mercantile Exchange. That left many
analysts convinced that speculators drove prices up to capitalize on
the weak dollar and fears that supplies could tighten in the face of
geopolitical tensions such as the Turkish parliament’s approval of a
possible military raid in northern Iraq. (Houston Chronicle)   

Gold and Stocks Have Been Holding Hands. Why?:
THE bull market in stocks is more than five years old. Surprisingly,
the bull market in gold has been running even longer. A new study shows
just how unusual it is for these two types of asset classes to perform
this well together for this long. Entitled “Analysis of the Investment Potential and Inflation-Hedging Ability of Precious Metals,”
the study has been circulating as an academic working paper since the
summer. Its authors are James Ross McCown, an associate professor of
economics at Oklahoma City University, and John R. Zimmerman, who
recently received a bachelor’s degree in finance from that
institution.  (New York Times)

• My keynote speech at the Forex Currency
Trades show in Las Vegas is now online.

Dollar May Extend Drop After G-7 Fails to Address Record Slide:
The dollar, trading at an all-time low against its major trading
partners, may extend the decline after the Group of Seven failed to
address the drop following a meeting of finance officials.The policy
makers, representing the U.S., U.K., Japan, Germany, Italy, France and
Canada, stuck to language in prior statements by saying “excess
volatility” in currencies is “undesirable” and that currencies
should trade in line with fundamentals. They also intensified calls for
China to let its currency strengthen, during yesterday’s gathering in
Washington. (Bloomberg) 

Fed Won’t Cut Again Unless Data Show It’s Needed:
With economic news running no worse than when Federal Reserve
officials cut interest rates last month, they aren’t likely to move
again when they meet the last two days of the month.  Consumer spending
and payroll employment have slowed, though not dramatically, while
gains in U.S. exports are reducing the nation’s trade deficit and
offsetting part of the decline in housing sales and construction. World
money markets show steady signs of improvement. Commercial
paper issuance is increasing, some of the highly leveraged loans on
bank balance sheets are being sold to investors again and investment
grade corporate securities are finding ready buyers. And the Dow Jones
industrials and Standard & Poor’s 500 indexes keep flirting with
records. (Bloomberg)   

The next oil shock could come soon:
The world is not short of oil, but Asian demand and Middle Eastern
turmoil are lifting prices. ARE you ready for oil at $US100 a barrel?
It’s getting closer after hitting new highs above $US88 this week, and
you will feel the pain at the petrol bowser. Console yourself with the
thought that you are taking a hit for your country: in the Organisation
for Economic Co-operation and Development universe, there’s probably
nowhere better to be than Australia when the price is surging. (The
Australian Age)  see also Saudi Aramco may miss production goals

World’s Top Finance Officials Pledge to Limit Economic Fallout From Credit Crisis:  Finance officials from the world’s top economic powers pledged Friday to do all they can to limit damage to the global economy from a jarring credit crisis as Wall Street took another plunge. The finance officials didn’t spell out a specific course of action. Rather, they sought to strike a confident tone that they are on top of the situation. Finance officials also said they will seek to learn the causes and lessons from the turmoil.   (AP)   


The Wall of worry continues to build:

• A few weeks ago, I mentioned how much inflation  China was exporting. Time magazine has caught on: China’s Next Big Export: Inflation   

Treasury Sales May Rise 50% as Deficit Suddenly Grows:
Government auctions of bills, notes and bonds in the fiscal year that
started this month may rise more than 50 percent to $220 billion,
according to UBS Securities LLC, one of the 21 primary dealers that
underwrite Treasury auctions. The first decline in corporate tax
revenue since 2003 increased the shortfall by 12 percent to $162.8
billion for the year ended in September, from $144.8 billion in the 12
months through April. (Bloomberg)

• Stephan Roach: Is this any way to run a modern-day world economy?

•  IMF Warns of Inflation Risks: Global economic leaders warned of inflation risks in advanced countries on the eve of the first World Bank meetings since Robert Zoellick took charge of an institution shaken by internal divisions and scandal. The International Monetary Fund’s policy-setting committee on Saturday noted rising food and oil prices and other indications of inflation in urging finance ministers and central bankers to stay focused on achieving price stability as well as on smoothing global financial market turbulence. (Associated Press)

Economic backdrop eerily similar to 1987 crash: Economists who believe history tends to repeat itself can be forgiven for approaching the 20th anniversary of the 1987 stock market crash with a sense of trepidation.Leading up to the "Black Monday" rout on Wall Street, a massive budget shortfall, falling dollar and burgeoning trade deficit clouded the horizon for the U.S. economy, even as the Dow hit a string of record highs.Sound familiar?Since the start of this decade, the U.S. budget has swung from surplus to deficit, the dollar has slid to record lows and a huge hole remains in the trade balance — only now it’s nearly twice as big compared to the overall economy. (Reuters)

Putin Admits Russian Inflation Out Of Control: Putin said that inflation, which has risen by 8.5% so far this year, was a problem as the Russian economy hadn’t stayed within "the planned parameters;" he’d hoped to keep inflation below 8.0% for the year. Inflation is expected to rise even higher–up to 10.0% — according to Finance Minister Aleksei Kudrin. (Forbes)      


Burned by Real Estate, Some Just Walk Away:  A growing number of investors like Mr. Rozzen are making the drastic decision to walk away from their properties and ultimately send their homes into foreclosure, lenders and real-estate agents say. Many investors who were hoping to quickly flip their investments are now left with homes that can no longer be sold for more than the mortgage debt. In many cases, these investors can’t even find tenants willing to pay enough rent to cover hefty mortgages.Certain data point to the trend. According to an August study by the Mortgage Bankers Association, defaults on mortgages where the owner doesn’t live in the house are a major driver of the defaults in Florida, Nevada, California and Arizona — four of the states with the fastest rising rates of seriously delinquent loans. Defaulted mortgages are defined as those 90 days or more past due or in foreclosure, according to the study. See also Behind Subprime Woes, A Cascade of Bad Bets (free Wall Street Journal)   

Property Worsens: Beginning, Middle or End?   

Inside the Upside-Down World of the Short Sale: For the last few years, Prescott and his partners have done a booming business in a transaction called a short sale. When a homeowner gets behind on his payments, he normally has two alternatives to foreclosure: refinance, or sell the house and pay back the loan. But since the local market collapsed in late 2005, many mortgages have turned ‘‘upside down’’— that is, the owner owes more than the house is currently worth — eliminating both options. That’s where Equity Solutions comes in. Prescott asks the bank to approve the sale of the house at a cut-rate price (hence, ‘‘short sale’’) and to forgive the balance of the mortgage, all prior to the actual foreclosure. When executed correctly, a short sale can leave everyone better off: the homeowner walks away with his credit largely intact; the bank salvages part of a nonperforming loan without the headache of repossessing a house; and, of course, Equity Solutions gets the best of the deal — a property it hopes to flip at a profit. (New York Times)

What You Get for… $5 Million


• Undercover Economist column: Did you pay to read this?   

Blue Orchard Bees Find Favor in Colony Collapse Disorder Peril: Rosalind James steps into a Styrofoam shelter surrounded by thousands of wild bees. Dozens buzz past the entomologist as she examines blocks that contain 3,540 holes for solitary bees. “Bee condos,” she says.The smattering of stings she’s sustained is a small sacrifice for work that may save a $75 billion-a-year slice of the U.S. economy.James leads a U.S. Department of Agriculture team in Logan, Utah, that is fighting fallout from Colony Collapse Disorder. The malady has killed at least 2 billion honeybees that pollinate crops from almonds to zucchini. As entomologists try to solve the mystery, scientists at Logan are teaching anti- social, wild bees to imitate commercially maintained honeybees and pollinate crops. (Bloomberg)   

Hollywood Ending: Whatever became of the Hollywood Stock Exchange? (Trader)

Apple thinks differently about iPhone: After months of barring third-party developers from working on the iPhone, Apple CEO Steve Jobs is rolling out the welcome mat.In an open letter on the company’s Web site, Jobs confirmed reports that a software development kit (SDK) for the iPhone will be released to developers next year. Come February, budding iPhone developers will be able to obtain a software development kit that will give them the tools and the know-how to create safe and reliable applications for the iPhone without having to depend on "jailbreak" programs.That means iPhone users will be able to add applications they can trust without voiding their warranties. (C/Net)

Networks Start to Offer TV on the Web (New York Times)   

Scientists: Genetic Ancestry Tests Mostly Bogus:
Several companies now claim that for as little as $100 and a swab of
the inner cheek, they can reveal a person’s family tree and ancestral
homeland. But more than a dozen scientists from various backgrounds say
such "recreational genetics" or "vanity tests" have significant
scientific limitations and rely on misconceptions about race and
genetics. (Scientist)


Robert Plant and Alison Krauss team up: When Robert Plant and Alison Krauss chose each other as musical partners for their unlikely new tandem album, "Raising Sand," they knew precisely what drew them close. "Alison’s voice has this fragility, this beautiful condition," Plant says. "I often thought, ‘How does a voice like this exist in the world? How does she maintain that serenity?’" Krauss had less ethereal feelings about Plant’s instrument. "It’s the kind of singing that makes me feel like my heart and lungs are going to be ripped out," she says. "There’s so much going on. There’s a thousand stories."   

Steve Carell in ‘Real Life’   

Best Bars in America

Squirrels Insane Obstacle Course   


That’s all from another gorgeous Fall weekend — talk about an endless summer! 


Got a comment, suggestion, link idea? Or do you just have
something on your mind?
The linkfest loves to get email!  If you’ve got something to say, then by all means please do.


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What's been said:

Discussions found on the web:
  1. JJL commented on Oct 21

    This week is going to be in two parts. Monday and Tuesday will be the running of the bulls with all of Friday’s losses and then some recouped. After the dismal data on home sales late in the week, and another ridiculous loss by CFC on Friday, I think things are going to look a bit different. The next time the market tanks 2% or more is the start of a long downtrend. Things are definitley getting exciting.

  2. Bill commented on Oct 21

    “Treasury Sales May Rise 50% as Deficit Suddenly Grows”

    I’m gonna guess: this means that interest rates go up, which means that currently-held bonds’ values go down, which means that bond funds lose value, which means this is a bad time to hold bond funds?

    Anyone willing to straighten me out? Thanks.

  3. whipsaw commented on Oct 21

    Bill said:
    I’m gonna guess: this means that interest rates go up, which means that currently-held bonds’ values go down, which means that bond funds lose value, which means this is a bad time to hold bond funds?

    Kind of depends on whether the increase in supply is offset by an increase in demand if stocks go south in Q1 and treasuries become more attractive as a result. If anything, I would expect rates to drop, but yields will move with the perceived risk in other asset classes.

    Maybe some professional bond ghoul will jump in with a more informed opinion, but that’s mine.


  4. Brian B. commented on Oct 21

    China just opened, not bad only -1100.00 down… should be a great next few months…

  5. andiron commented on Oct 21

    japan down 500 points..
    bring it on like Mr bush says

  6. Matt commented on Oct 21

    Has anyone found lately the RSS feeds here at Big Picture aren’t rendering correctly?? I see a bunch of html tags and no actual formatting. It’s almost unreadable.

    I don’t know Barry’s email address, but if someone could alert him to this post I’d appreciate it. I’m using NetNewsWire one of most popular RSS readers on the Mac.


    — Matt

  7. whipsaw commented on Oct 21

    Yes, it’s the Bear Rapture boys! heheheh.

    What, were you expecting Asian markets to gap up after Friday’s debacle? To provide a little perspective, the December S&P E-Mini is off 11 pts at present which is about where some heavy support is located. Maybe it will drop like a rock or maybe you’ll awaken to the usual “futures point to higher open,” I don’t know.

    The point is that it doesn’t pay to make too much of what happens in an hour or in a day. I am expecting this to be a rough week, but will be quite surprised if it turns out to be extraordinarily bad. I would be much more surprised if there isn’t a moonshot the following week as I smell intervention in the air.

    If my hunch is correct, I will load up long as events unfold, but I’m also going to stick a derringer in my boot via some Jan09 SPY puts once they cheapen. Betting against Ben and Hank and cronies is probably a waste of money, but it doesn’t hurt to buy a little insurance either.

    Good luck.


  8. Brian B. commented on Oct 22


    wow, thats alot of thinking… me, i am not very smart so i just shorted the mini’s. at 94.75, and covered 93.25. Now I dont have to work tomorrow, daily goal is met.. always nice way to start the week. BTW, you are correct, I dont care what Asia or we open up with, cuase “Anything can happen”. never force your will, ego, or bias on the market, it will slap you everytime.. you guys have a good day tomorrow…

  9. Winston Munn commented on Oct 22

    I’m not so certain that another rate cut at this point would bring about a round of euphoria but instead would act to amplify concerns and send the markets even lower.

  10. Payday loan commented on Oct 22

    Indian market was way to high in past but after SEBI’s review on P notes, It is coming down daily and once it was 2000point down in first hour of opening.

  11. whipsaw commented on Oct 22

    Brian B. said:
    wow, thats alot of thinking… me, i am not very smart so i just shorted the mini’s. at 94.75, and covered 93.25. Now I dont have to work tomorrow, daily goal is met

    I’m glad you made some money, but now it is at 97.75 and the Asian markets are recovering some, so you probably just squeaked one between SS and 3rd. You can certainly make money on 2 hour trades either way, but going short against The Man is not a good plan in a longer time frame usually.

    Unfortunately, I don’t the luxury of taking the day off if a trade goes well or even if every trade went well. Long story.

    Anyway, I have very little at risk right now in my trading account and am mainly watching, not praying for any particular result. It would be entirely reasonable to see a double top in $SPX, but if that was the end of the story, there couldn’t be any triple or quadruple tops, yet they happen. You can also let earnings and govt noise lead you from one extreme to another, but I prefer to watch the charts while taking political/economic reality into account in the background only.

    Spend your winnings wisely, if at all.


  12. whipsaw commented on Oct 22

    Winston Munn said:
    I’m not so certain that another rate cut at this point would bring about a round of euphoria but instead would act to amplify concerns and send the markets even lower.

    hello Winston-

    I think that this downleg is just a contrived device to provide cover for the cut. What you are suggesting is entirely logical, but is not part of The Plan. I firmly believe that we are in a managed market and have been ever since Bush threw the keys to Paulson, else it would have crapped out over a year ago.


  13. Justin commented on Oct 22


    “The Economist,” had a good special report section, on the Central Bankers. The jist of it all is: they can only do so much.

    In my view this thing is not going to be pretty, inflation, and stagnation. If Paulson, thinks that lower rates/lower dollar and our manufactoring goods being bought by overseas countries is going to prop things up, he’s a whishful thinker. Besides why is it that when the dollar is rising, the Bulls claim that our exports are a very small percent of our overall economy, and therefore the loss in exports is insignificant, but when the dollar goes down, the Bulls say that exports are going to save the day? Go figure?

  14. Eric commented on Oct 24

    Re the bees:

    There is a lot of information on previous bee die-offs, particular in
    the last 10 years in Europe (France). After discovering and researching
    this, I find it surprising that this historical perspective has received
    almost no treatment in the US press.

    Here is some history as I have been able to gather it: Bayer Corporation
    started selling the insecticide Imidacloprid under the name of “Gaucho”
    in France in 1994. Questions were immediately raised by beekeepers about
    its effects on bees, and by 1997 France was experiencing major bee
    die-offs. After investigating, the French government banned Gaucho in
    1999, essentially blaming it for the die-offs. Bayer countered with
    experiments showing that the levels of exposure encountered by bees in
    practice do not kill them. Subsequent research showed that, while this
    is true in the immediate short term, sublethal levels of Gaucho damage
    the bees’ nervous systems so that they are unable to navigate, causing
    them to eventually die of starvation out in the fields.

    Wikipedia (plus google searches) verifies that Imidacloprid is currently
    marketed in the US and Canada under names like Admire, Evidence,
    Leverage, Trimax. (Note the first three names are hard to google
    effectively.) Apparently Imidacloprid is presently the most widely
    marketed insecticide worldwide and also the most profitable for Bayer.

    The French experience:

    Imidacloprid is toxic to honeybees:

    Organic beekeepers seem to be having less trouble with CCD:

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