Following last week’s near frantic activity (GDP, FOMC, NFP) this is a relatively light week for economic data: Wednesday has Productivity and Costs, and Wholesale Trade; On Thursday, Retailers report October sales, and given energy and food prices, the monthly figures may be none too pretty. Thursday also has Jobless Claims; Friday, Import and Export Prices, International Trade and Consumer Sentiment.
We also hear from more Central Bankers on Thursday: BoE at 7:00am ET, ECB at 7:45am ET.
Earnings season continues, albeit at a slower pace: GM is Wednesday; Ford (F) is Thursday; TIme Warner (TWX) and Fews Corp (NWS) release profits on Wednesday
Lots of Fed chatter this week: Federal Reserve Chairman Ben Bernanke presents to speeches this week: On Tuesday at a microfinance summit in San Antonio, and on Thursday before Congress’ Joint Economic Committee. Fed Governor Frederic Mishkin gives a speech Monday-morning at derivatives and risk management conference; Monday afternoon Fed Governor Randall Kroszner on mortgage-lending; Richmond Fed President Jeffrey Lacker discusses the role of central banks in credit markets Wednesday morn; Wednesday afternoon sees speeches by Fed Governor Kevin Warsh, Atlanta Fed President Dennis Lockhart and St. Louis Fed President William Poole.
While any one of these can be market moving, after Chairman Bernanke, Mishkin and Poole seemingly swing the most weight.
The credit crunch, and its impact on Banks and Brokers remains a key issue (links below).The WSJ quoted Jim Awad about what danger lurks in the hearts of traders: "The
market will wake up every morning to see if there’s unexpected bad news
from the credit sector. The real question is going to be how many
credit surprises there are, how bad they are, and the implications for
Ok, enough yadda yadda yadda: On to the lumber yard!
INVESTING & TRADING
• Speculation of Bigger Loan Writedowns?:
Concern about the extent of losses among financial companies sent
banks and brokerages in the S&P 500 to a 6 percent weekly decline.
Citigroup’s warning on Oct. 15 that defaults will plague lenders for
the rest of the year spurred a 7.6 decline in financial shares two
weeks ago, the worst since 2002. (Bloomberg)
• SPX Earnings Bound for Double-Digit Gains: Third-quarter growth remains strong thus far and has held above double digits for the past week. The median company has reported growth of 11.1%. Every sector currently boasts more positive surprises than negatives and the surprise ratio has continued its steady rise over the past week. (Zachs)
• Watch the Nasdaq-100:
One third of the advance in the Nasdaq-100 is due to just two stocks,
Apple and Google. These are the types of statistics that can put the
market in a precarious position. Pick your poison. Place your eggs in a narrow
basket or bet against stocks that are just plain powerful. Either way,
risk is elevated and picking the right stocks is critical. (Barron’s)
• Dollar Falls to Record Low Versus Euro on Credit Concern, Fed:
The dollar fell to a record against the euro and dropped to the weakest
since 1981 versus the pound on concern deepening credit-market losses
will prompt the Federal Reserve to reduce interest rates a third time
this year. (Bloomberg)
• Calling Gold’s Tune:
WITH THE FEDERAL RESERVE’S interest-rate cut out of the way, gold
futures are likely to continue taking guidance from their closest
bedfellows of late: the euro and crude oil. The most-active December
gold contract on Nymex’s Comex surpassed $800 an ounce — a
psychological benchmark set for the first time in 1980 — on the back
of stronger crude oil, a falling U.S. dollar, and inflation worries.
While gold probably has more upside in the months to come, the yellow
metal’s star power might be reined in over the short term. (Barron’s)
• Why Oil May Not Stop at $100:
Oil at $100 a barrel? That may not be the worst of it. Consuming
countries, they argued, will simply have to deal with the fact that new
pockets of oil are getting far harder and more expensive to tap. That,
combined with years of underinvestment by the industry, has led to a
tapering off of new oil supplies that will continue for years, despite
rising energy demand in Asia, the Middle East and some industrialized
countries. (Wall Street Journal)
• A very good explanation about enterprise prediction markets — Before It’s Too Late. Prediction markets work by soliciting input across a diverse group of "traders" inside and/or outside the organization. Global brands that have been using prediction markets since they first became available have quickly realized they can significantly improve forecasts of key performance indicators. (Forbes)
• Municipal Bond Insurers: More dangerous than you realize Trouble for MBIA, FSA, FGIC, and AMBAC . . .
• Get ready for SFAS157, a November 15th accounting change impacting Level 3 assets: From November 15, we will have a new tool for figuring out how much toxic waste is in investment banks’ balance sheets. The new US accounting rule SFAS157 requires banks to divide their tradable assets into three "levels" according to how easy it is to get a market price for them. Level 1 assets have quoted prices in active markets. At the other extreme Level 3 assets have only unobservable inputs to measure value and are thus valued by reference to the banks’ own models. (Urban Digs)
• Handicapping the Environmental Gold Rush:
The green stampede is on. As a global economy powered by cheap fossil
fuel comes under intense pressure to change, corporate executives are
racing to stay ahead of the tectonic shift in their world. New companies —
even new industries — are challenging the established giants to
exploit a growing market for everything from green cars to green fuels.
(free Wall Street Journal)
• Auto Sector’s Role Dwindles, and Spending Suffers: During the third quarter, the government reported, spending by Americans on autos and auto parts fell to 3.1 percent of the total gross domestic product. As recently as 2003, the auto industry was taking a 4 percent share of G.D.P., well above its average share, over the last 50 years, of 3.7 percent. A few tenths of a percentage point do not sound like much. But if the auto industry were taking its normal share this year, that would mean additional spending of about $80 (NYT) see also Chrysler to Phase Out Magnum, Crossfire, PT Convertible, Pacifica
• Is Merrill the tip of the iceberg? IS THERE such a thing as panicky resilience? That might be the best way to describe the mood in stockmarkets. The S&P 500 index ended this week up a steely 2.6%. Yet nervousness is everywhere, with the flimsiest of rumours sending share prices sky-rocketing or lurching. Markets leapt on Wednesday after someone whispered that the Federal Reserve was about to announce an emergency rate cut. It was nonsense. The next day AIG, the world’s largest insurer, tumbled by 8%, before recovering, on unsubstantiated fears that it would suffer a whopping loss on its $33 billion of subprime mortgage-related assets. (Economist)
The wall of worry continues to build:
• How does BLS account for all of the surcharges on invoices? Benign Inflation, Added Surcharges
• Why a Fed cut won’t save Christmas:
Could a Federal Reserve interest rate cut on Wednesday be the trick
that treats tapped-out consumers to more spending money during the
critical holiday shopping season? Most economists say the extra money
may be too little, too late to save Christmas 2007. "Another
rate cut won’t give a lot more money to cash-strapped consumers," said
Paul Kasriel, senior vice president and director of economic research
at Northern Trust. "The first cut in September also didn’t get
Americans to spend more." (CNN Money)
• Making Up Jobs: Floyd Norris notes that 80% percent of BLS new jobs came not froma ctual counted positions, but from the statistical adjustments.
• Inflation at 16.7%? Some people continue to take government statistics on inflation as if they were an accurate representation of the real world. Others are not so naive: Richard Russell reports that a recent Economist magazine puts the year-over-year dollar index of ‘all item’s’ up 16.7%. The price of food is up 31.6% year-over-year. But the government tells us ‘core inflation’ is running between 1 – 2%. Its amazing that some people — apparently suffering from blunt head trauma — still take the 1-2% core readings seriously.
• With Oil at $96 and Gold over $800, the Fed has belatedly rediscovered their inflation worries
• The Catastrophist View:
What would it take to send the U.S. economy—and New York’s—into free
fall? A doomsday primer. New York Magazine channels a Cramer-like rant
about the end of the economic world. Accidentally amusing.
• Alarm is growing about rising food prices:
Concern about the cost of food is even spreading beyond the world’s
poor countries. Last month Italians took to the street in Rome and
Milan to protest against an increase in pasta prices. They are eating
less too: Italians’ pasta and bread consumption dropped 7.4% and milk
consumption fell by 2.6% in the first eight months of the year. Efforts to find solutions have been complicated by political manipulation . . . price controls, import tariffs, and subsidies. (Economist)
• Can the U.S. economy avoid recession?:
If you’ve listened recently to some prominent Wall Street economists,
the U.S. economy in the next two quarters is going to slip from the
jaws of the credit crunch, hurdle the tiger-trap of the housing
slowdown, swing across boiling oil prices, and land on its feet having
narrowly escaped a recession. But many economists are skeptical. They
say that this scenario of the economy as swashbuckling hero from a
classic B movie isn’t very realistic. (Marketwatch)
• Communities Go Solar Together and Save Convincing
a group of neighbors to agree on anything is rarely easy. But in a
growing number of communities in the U.S. over the past year neighbors
have proven fairly persuasive at influencing dozens of their peers to
spend $25,000 or more on a rooftop solar system. (Real Estate Journal)
• Paul links to a very funny droll BBC video on finance: The Truth About Mortgage Markets
• Foreclosures almost doubled from ’06: report Residential foreclosure filings nearly doubled last quarter from a year earlier, and appear set to increase into 2008, a report said on Thursday. Foreclosure filings for July-September rose to 635,159, representing one in every 196 households and a 30 percent jump from the second quarter, according to RealtyTrac, a marketer of foreclosure properties based in Irvine, California. (Reuters) see also Texas Makes Top 10 List In Home Foreclosures
TECHNOLOGY & SCIENCE
• Apple’s Microsoft-Devouring Jungle Cat — How Leopard demolishes Vista:
Steve Jobs may be the undisputed grand master of technology hype, but
when it comes to numbering operating systems, he’s oddly self-effacing.
With Leopard, the new version of OS X, Apple has nudged the version
number forward from 10.4 to 10.5. Most companies would assign such a
teensy increment to an update with a few minor bug fixes, but Leopard
includes more than 300 new features by Apple’s count.
• Chris Anderson, Wired’s Editor-in-Chief, goes Postal on PR weenies
• Why Google Turned Into a Social Butterfly: In a bravura switch of strategy, Google left its own island to embrace open standards that belong to no one company. Its initiative, which it calls OpenSocial, is an appeal to software developers and Web sites to cooperate in adopting a single set of software standards for the little software widgets that can add a social-networking layer to all Web sites. Unlike Facebook’s programming requirements, Google’s use nonproprietary programming languages. (NYT) see also Checkmate? MySpace, Bebo and SixApart To Join Google OpenSocial: Facebook vs everyone else . . .
• If We Had No Moon:
In this essay, Bernard Foing looks at the effect the Moon has had on
the Earth, and explores how different our world would be if we had no
MUSIC BOOKS MOVIES TV FUN!
• All time Greatest Movie Soundtracks! The wankers at Vanity Fair started some buzz about a crappy article on Music Soundtracks. Rather than waste too
much time telling you how clueless VF’s music editors are, or why they are wankers for making controversial pick to generate buzz, I would rather — in the spirit of our Friday Night Jazz Series point you to this very worthwhile list of films and soundtracks for your perusal. So far over 50 of you have weighed in with some excellent suggestions . . . .
• Cleavage at the office: Inappropriate? The Today show asks "What kind of message does it send in the workplace? Is it ever acceptable? NOTE: This was accidentally very funny
That’s all from here — remember, enjoy that extra hour of sleep, with the end of Daylight saving time last night . . .
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