Mid-October Linkfest: Week in Preview

Yesterday, we looked at the week that was. Today, we preview the week that is to come.

Its a relatively light week of economic releases. Monday is Empire State Mfg Survey; Tuesday brings Same Store Sales, and Industrial Production (0.1%). Wednesday has two key reports: Housing Starts (1.3M), which is expected to be very soft, and Consumer Price Index (0.2%). The CPI is an important component determining the outcome of the next Fed meeting (Oct. 31st). On Thursday, we learn about Jobless Claims (312K), Leading Indicators (0.3%), and the Philadelphia Fed Survey (7.0).

But the real news this week will be profit reports. We have a slew of Q3 earnings due this week, heavy with Tech and Finance firms:

Monday: Citigroup (C)
Tuesday:  Wells Fargo (WFC)
Wednesday: J.P. Morgan Chase (JPM), Washington Mutual (WM), BlackRock (BLK)
Thursday: Bank of America (BAC)
Friday: Wachovia (WB)

Eric Savitz is calling this "Super Tuesday" in light of all the tech reports we get: Intel (INTC), IBM (IBM), Yahoo! (YHOO) and Seagate
(STX). Wednesday is eBay (EBAY); Thursday
is Google (GOOG), Motorola (MOT), Nokia (NOK), SAP (SAP), SanDisk (SNDK) and Xilinx

Also on the earnings docket this week are afew non tech, non-financial firms: Monday is Genentech (DNA); Tuesday we see Johnson & Johnson (JNJ); Wednesday, Coca-Cola (KO), Altria (MO), United Technologies (UTX); Thursday is McDonalds (MCD), Pfizer (PFE); Friday is Caterpillar (CAT), 3M (MMM), and Schlumberger (SLB)

There are a few Fed speeches scheduled this week — Kansas City Fed President Thomas Hoenig Cleveland Fed President Sandra Pianalto, and Philadelphia Fed President Charles Plosser — but nothing from the Chairman. Also, President Bush will meet with the Dalai Lama (Big hitter, the Lama – long) at the White House on Tuesday (so he’s got that going for him, which is nice).

Loosen up those wrists: Its linkfest time!:


An Aging Bull Can Still Be a Raging Bull:  To the growing list of descriptions for this bull market — like “record setting,” “resilient” and “uninterrupted” — you can add one more: “old.”Last week, this bull did something that only four other stock market rallies since 1942 have accomplished: it lived to see its fifth birthday, on Oct. 10.And, on Oct. 23, barring an 11th-hour market plunge, this bull will turn 5 years and 14 days old, surpassing the 1982-87 period as the third-longest bull run in the last 75 years, based on the Dow Jones industrial average. (Based on the Standard & Poor’s 500-stock index, it will become the fourth-longest rally.) But doesn’t that mean the bull is that much closer to being put out to pasture? Not necessarily.  (New York Times)

• Its the 20th anniversary of the 1987 Market Crash. Major media are having an orgy of retrospectives: Barron’s (Black Monday), WSJ (Looking Back, Persistence Is the Lesson), New York Times (A Pause to Recall the 1987 Crash), BusinessWeek (Lessons from the ’87 Crash), NYPost (TWENTY YEARS AFTER) Guardian (The lessons of Black Monday). I’m sure more are to follow.

What do Antique Watches and Fed Fund Futures have in common?

Fund sees move away from dollar-based commodities
Resource-rich countries will move away from the dollar as a base for
the commodities they produce to protect their earnings as the dollar’s
slide accelerates, UK-based Emergent Asset Management told Reuters. The
debate about commodity denomination has heated up over the past few
months because the dollar has come under persistent selling pressure as
markets started to price in economic slowdown and falling interest
rates in the United States. (Reuters)

Research in Sport Psychology: What It Means For Traders   

• Where to invest when the financial markets seem unduly risky and the risk/reward ratio generally unfavorable?
Hard assets will provide more profits and carry less risk than most
financial assets. And that since most "hard-asset derivatives (equity)
remain unpopular among financial-market investors," they provide
intriguing investment potential (Barron’s) if no Barrons sub, go here.

U.S. Stock Market Stumble Presaged by S&P 500 Options: Skittishness over the U.S. stock
market’s record-setting rally is reaching a crescendo among
options traders who are preparing for a crash. Investors are paying the most ever to protect against a drop
in the Standard & Poor’s 500 Index, data compiled by Morgan
Stanley show. The gap between the price of so-called put options
on the benchmark for U.S. equity and the cost to wager on further
gains has averaged about 8 percentage points since August. That’s
more than the previous high in July 2001, before the index
dropped 34 percent and fell to the lowest this decade. (Bloomberg)

Expectations are ~9% earnings gains as Analysts Turn More Cautious: We are looking forward to yet another quarter of solid earnings growth
among the S&P 500 firms. While the current expectations for median
year-over-year growth fall short of double digits, at 9.0%, it is not
that far away. Early indications of actual third-quarter earnings, 29
firms (5.8% of S&P 500) with quarters ending in August, have been
reported. The most notable of these were the Investment Bankers, where
three disappointed and one had a positive surprise. However, one of
those three, on closer inspection is just about inline. (Zachs) see also Key Earnings Reports Next Week   

CNN Money’s Green Investing

A Subprime Bet for (Money Mgr) Paulson? A $20 billion hedge fund may have hit on a unique investment strategy for playing the subprime mortgage bust: fund a consumer-protection group. Paulson & Co., which has seen its assets under management soar this year through fortuitous bets in the subprime market, has given $15 million to the Center for Responsible Lending, a Washington nonprofit that has been lobbying on Capitol Hill for passage of bankruptcy legislation.  (BusinessWeek)

How bubbly is China? Just How High Can China’s Shares Fly?  IF YOU’RE CHINESE, A "BUBBLE" is something that fizzes in your champagne; after all, your stock market’s jumped 400% over the last two years. If you’re not, it describes the rapidly swelling valuation of Mainland shares that are largely forbidden to you, but whose valuations are starting to be emulated by stocks in Hong Kong, Singapore and a host of nearby markets. Bubbles always pop, but — and this appears to be true in China — it sometimes happens less quickly than some people wish. (Barron’s)

• The Capital of Capital No More?   The question today — one being asked with increasing frequency and anxiety in certain quarters — is whether New York as a whole is going the way of Wall Street. Are New York’s days as the world’s epicenter of finance coming to an end?  (New York Times Magazine)   

Hedge-Fund Manager Wace Sees Stock-Price `Explosion’

Mapping Lampert’s next Sears move:
Billionaire hedge fund manager Eddie Lampert, who controls Sears
Holdings, has earned a reputation as a boy wonder of retailing by
wringing profits from an aging department store chain. Though that
reputation frayed when Sears reported sickly earnings this summer,
investors, who have bid up the stock 20 percent from its September
lows, are betting Lampert has moves up his sleeve that will soon clear
away doubts about the company’s future. While there is plenty of
speculation as to what Lampert might do next — including further
balance sheet enhancements and real estate sales — the company’s
operating weaknesses may be too big to overcome, some analysts
say. (Fortune)

Does the US Treasury have the power to seize gold and silver?

Carl Icahn explains how all those Dumb Guys Became CEOs in Corporate America: Ever worked for an idiot as a boss? Notable billionaire Carl Icahn,
who is a corporate raider, shareholder activist, or value-oriented
investor, depending on who you ask, has a theory on how that person
managed to score the corner office. It’s kind of a reverse Darwin’s Theory. The survival of the dumbest,
if you will. And the famous investor has this theory to thank for his
multi-billion dollar net worth . . . (Portfolio)


The Wall of worry continues to build:

• Yale economics professor Robert Shiller on the Sniffles That Precede a Recession: But there are worrisome symptoms, and they bear close watching. The most important is a creeping sense of malaise that could turn into a general loss of confidence. The downturn in the housing market and the repercussions in financial markets are critical factors. (New York Times)

• Über-diners Tim & Nina Zagat (yes, those Zagats) say price increases in NY restaurants are flat. My response: WTF? Zagat’s Restaurant Inflation

October Rate Cut Less Likely:
Yields rose last week, especially at the short end of the yield curve,
amid further signs of the revival of investors’ risk appetites, from
Chinese stocks to technology-momentum darlings. With economic data
showing few signs of deterioration, for now, prospects grew dimmer for
further interest-rate cuts by the Federal Reserve later this month. (Barron’s) see also Fed Left Plans for Further Cuts Dependent on Data

PPI: What it Says, and Why We’re Concerned

Fed Test: Will It Adjust in Time If Inflation Stirs? Inflation jitters have spread through financial
markets in recent weeks, fueled by the Federal Reserve’s aggressive
interest-rate cut last month as a persistent housing slump and the
specter of a credit crunch increased fears of recession. Inflation doves appear to have data on their side for now. But the hawks may yet find cause for concern. (Wall Street Journal)  see also WHO’S BEN CHATTING WITH ABOUT THE ECONOMY?   



An increasingly curious schism seems to be developing across the real estate markets: We first saw this as a split between the Haves and the Have Nots; Now, we also see further divergement developing between the Haves and the Have Mores.

• From the least to the most:

Desperate Seller Unloads Miami Condo — by the Inch

The American Dream Foreclosed: A SURGE in subprime lending across the region in recent years is now helping to fuel a boom in foreclosures, with the number of filings rising 55 percent in suburban counties in the first nine months of this year, compared with the same period last year, an analysis of real estate data shows. (New York Times) see also Subprime Mortgages in New York, New Jersey and Connecticut   

Median Rises, but Sales Fall: What is happening across the East End: a meteoric rise in sale prices that many brokers say is driven by big Hamptons trophy-home sales, but a glut of homes valued under $10 million sitting on the market, including some new ones built by speculators.

Where the Haves Live: There’s a high concentration of wealthy people living along Fifth, Park and Madison Avenues between 77th and 82nd Streets, for example. But two of the top-ranked block groups have changed considerably since the ’80s.  (New York Times Magazine)


Web Traffic Measuring Firms Nielsen Net Ratings and comScore Media Metrix may soon find their tools worthless . . .

Newsweek’s Daniel Gross explains why even the ultra-rich are abandoning the Republicans in CEOs for Clinton: For nearly the entire 20th century, a simple formula held:
Businesspeople like Republicans and don’t like Democrats. Republican
politicians and voters heartily embrace free trade and lower taxes,
while Democratic politicians and their constituencies cotton to
protectionism and higher taxes. Over the past century, racial, ethnic,
and geographic realignments altered the shape of the national parties
beyond recognition. But when it came to the wealthy, there was less
movement than in the facial muscles of an over-Botoxed newscaster.
Until now.

Edison’s Dimming Bulbs: How Wal-Mart and the government are killing the incandescent light bulb. (Slate)

Leak Severed a Link to Al-Qaeda’s Secrets:
A small private intelligence company that monitors Islamic terrorist
groups obtained a new Osama bin Laden video ahead of its official
release last month, and around 10 a.m. on Sept. 7, it notified the Bush
administration of its secret acquisition. By midafternoon that day, the
video and a transcript of its audio track had been leaked from within
the Bush administration to cable television news and broadcast
worldwide. The founder of the company, the SITE Intelligence Group,
says this premature disclosure tipped al-Qaeda to a security breach and
destroyed a years-long surveillance operation that the company has used
to intercept and pass along secret messages, videos and advance
warnings of suicide bombings from the terrorist group’s communications
network. (Washington Post)


Nikon Small World photography contest

In Radiohead Price Plan, Some See a Movement: Initially, they viewed it as a way to let fans preview Radiohead’s music without the guidance — or filter — of radio programmers, music critics or other conventional tastemakers.Instead, when Radiohead quietly divulged plans to let fans name their price for the digital download of its new album, “In Rainbows,” it incited talk of a revolution in the music industry, which has found the digital marketplace to be far less of a cash cow than it once dreamed. Though Radiohead is in a position that can’t easily be replicated — it completed its long-term recording contract with the music giant EMI while retaining a big audience of obsessive fans — its move is being seen as a sign for aspiring 21st-century music stars. (New York Times) see also Radiohead, Big Enough to Act Like a Baby Band

Yahoo Music to record execs: No more DRM, ever

Searching for God in the Brain
Such efforts to reveal the neural correlates of the divine—a new
discipline with the warring titles “neurotheology” and “spiritual
neuroscience”—not only might reconcile religion and science but also
might help point to ways of eliciting pleasurable otherworldly feelings
in people who do not have them or who cannot summon them at will.
Because of the positive effect of such experiences on those who have
them, some researchers speculate that the ability to induce them
artificially could transform people’s lives by making them happier,
healthier and better able to concentrate. Ultimately, however,
neuroscientists study this question because they want to better
understand the neural basis of a phenomenon that plays a central role
in the lives of so many. (Scientific American)

Stop Paying for Ring Tones ! 

TiVo Steals Nielsen’s Business
We have some more TV viewing statistics from this fall season’s
critical premiere week — but not from the usual source. These rankings
came from TiVo (TIVO), which collects user data automatically as its
video-recorder customers flick through their TV stations via that
digital set-top box. It’s a far more reliable data source — 100%
correct, in fact — than the old-school method of asking viewers to
fill out forms by hand and mail them to Tampa. (Motley Fool)

Candidates Issue Matrix (MSNBC)


Blade Runner: The Final Cut at the Ziegfeld: This week, I saw the the new theatrical version of Blade Runner in its full cinematic glory. How was it? Well, I have some good news and some bad news . . .   

TiVo To Offer RealNetworks Music Service:
TiVo on Tuesday said it would offer RealNetworks’ Rhapsody online
music service, further positioning TiVo’s namesake digital video
recorder as the Internet hub for the home.  (Information Week)

• Video: Colbert Gives Springsteen The 10th Avenue Freeze-Out (The Daily Tube)

That’s all from glorious weather in the North East, where the Oysterfest is in full swing! Enjoy what’s left of your weekend . . .


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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Discussions found on the web:
  1. Winston Munn commented on Oct 14

    Gee, and I always thought the Federal Reserve was the “lender of last resort.”

    I guess the super conduit will be the “lender of really, really last resort.”

    This sounds to me like a support group for CEOs with bad business judgement: “Hi. I’m Bob. I have an SIV.”

    The purpose – it seems to me – is to cover the demand for short term loans needed to roll over ABCP that has no market. The point would be to allow a progressive series of time bombs to explode instead of the single nuclear explosion that is now primed to go off.

    You can almost here Hank’s input: “Fire sale! Not on my watch!”

  2. Philippe commented on Oct 15

    When making an autopsy of what went wrong I do not see mauch improvement through the SIV scheme.
    They may sell the the senior debts at best and the SIV will remain what they are “a junkyard”
    Treasury is addressing the bottlenecks of the CP in looking at the supply side and a pool of banks willing to liquefy their assets, but on the demand side ratings efficiency? Hedge funds intermediaries? reliable risk assessment? Banks several and joint as liquidity providers? Banks risks assessment ?

    “The securitisation of assets from Banks has not only shown its pain to the blind folded private investors but is showing now the absence of legal identity and responsibility when it comes to the work out of this « mess » (please see several cases as reported by M Shedlock http://globaleconomicanalysis.blogspot.com)
    For future use it should be made as legal obligation to the « prima facie » assets sellers and wholesale sellers to keep a minimum stake in risk and treasury in the bulk of assets under securitisation throughout the life of the assets, this rule should apply within the chain of bulk sellers and intermediaries and have several advantages:

    To ensure the risk management, the risk assessment, the work out as a legal responsibility of the prima facie lender, or its heir the « sub managers ».
    To mitigate the full risk as dumped into the private individuals ledgers (this clause is nothing else but a replicate of the loans syndication clause among Banks and has amazingly been ignored when dumping the assets in the private individuals funds investment funds as set by Banks and insurance companies).
    It may as well avoid the conflict of interest, Banks looking cleaver and their customer’s funds looking …much less cleaver (see Goldman Sachs and its global alpha fund down 40 Pct in a year, see BNP Paribas funds, see Axa IM in Luxembourg)

  3. Al Czervik commented on Oct 15

    BR: “Also, President Bush will meet with the Dalai Lama (Big hitter, the Lama – long) at the White House on Tuesday (so he’s got that going for him, which is nice).

    The Lama huh? Funny since Bush is basically Carl Spackler if Carl had been born into the right, wealthy family. Life imitating art? With Iraq as the gopher?

  4. michael schumacher commented on Oct 15

    Echo the thought of “Al” above…

    Now I’m going to clean up the coffee I just spit at the monitor.

    Too funny…


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