Yesterday, we reviewed the week that was. Today, we look at the week that will be.
Stocks and futures markets are open Monday — but since its Veterans’ Day, banks and bond markets are closed. Pending Home Sales Index is released later in the day.
We get a few inflation stats this week: Producer Price Index is due Wednesday, and October’s Consumer Price Index
will follow on Thursday. As you may know, except for all the items going up in price, there’s hardly any inflation at all.
October’s retail sales report is due Wednesday, and this week, we also hear from many of the retailers on their Q3 profits. Based on what we have seen so far — weak back-to-school raised fears of a dreary Christmas, while what little strength we saw was mostly Food Inflation — expectations are muted.
The WSJ asked what department stores had to worry about, "Aside from a swooning housing market, soaring energy prices, a credit crisis and fresh concerns about jobs, [and] one of the balmiest Falls on record." Aside from that Mrs. Lincoln, how was the play?
Reporting in the coming weeks are Macy’s (M), J.C. Penney (JCP), Kohl’s (KOH) Sears Holdings (SHLD), Nordstrom (JWN), Wal-Mart Stores (WMT) and Target (TGT). Also reporting this week are home Improvement stores Home Depot (HD) and Lowe’s (LOW).
Plenty of Fed chatter in store this week: On Wednesday, Fed Chairman Ben Bernanke speaks about "Monetary Arrangements in the 21st Century." The rest of the elves are pretty busy this week: Fed Governor Randall Kroszner Tuesday, Dallas Fed President Richard Fisher Wednesday, Thursday is Chicago Fed President Charles Evans and Kansas City Fed President Thomas Hoenig. Atlanta Fed President Dennis Lockhart on Friday.
Regardless, there’s plenty of interesting thing to digest this week. Loosen up your mousing wrist, its time to get clickin’:
INVESTING & TRADING
• Is the Market Finally Waking Up? is this a sign that the economy is in real trouble, as some investors believe? Or is this simply a knee-jerk reaction to the continuing trouble in the credit markets? (New York Times)
• Be sure to vote in our pool: When Does GM Get Kicked Out of the DJIA?
• Make money in 2008: The outlook:
Given the pervasive gloom in the face of the housing slump and sudden
sharp drops in stock prices earlier this year, you might have figured
it was just a matter of time before the economy would collapse faster
than the Colorado Rockies in the World Series. The litany of depressing
news has only seemed to get worse since then: surging oil prices,
mortgage defaults, investment banks writing off subprime loans, the
dollar skidding to new lows – pass the Prozac. Well, we’ve got two
words for you: Cheer up. If you delve behind the headlines, you’ll find
that despite all of these challenges, the economy has actually held up
pretty well this year. And key indicators suggest that next year should
be even better . . . (Money Magazine)
• Here’s an unpleasant thought: What if the Financials are Worse than they look?
• As Oil Soars, Natural Gas Is a Bargain:
As oil prices surged over the last few months, natural gas prices in
the United States did something that could help to cushion the economic
shock. They fell.A result is that those who heat their homes with
natural gas — by far the dominant fuel in the United States — will see
prices roughly in line with last winter’s. But for those who use
heating oil, as many do in the Northeast, prices seem likely to be
about 50 percent higher than they were last winter.
• All the right moves: Profit in 2008 The 22 best ways to keep safe, spend smart and make your money grow in the year ahead:
Tumbling home values. Soaring energy prices. A topsy-turvy stock market
and a gazillion other financial worries, not the least of which is
whether we’ll spend the coming year mired in recession. Considering
all the black clouds hanging over the economy, you probably think
there’s no way you can really expect to prosper in 2008. It will be all
you can do just to hang in there. If that is what you’re thinking,
we’re happy to tell you that you’re wrong. There will be plenty of
opportunities to make money next year – yes, even in real estate – as
well as ways to insulate your finances from the most serious economic
challenges ahead. (Money Magazine)
• Mathematical Fortune-Telling:
How well can game theory solve business and political disputes?
Predicting the future is not very hard, according to Bruce Bueno de
Mesquita: a little mathematics is all you need. Figuring out how to
manipulate a situation to achieve specific aims is a bit less
straightforward, but Bueno de Mesquita says his mathematical tools can
usually do that, too. (Science News)
• Sentiment watch — Our Brains Seem Built for Optimism:
In the palette of human temperament, a rose-colored view of the future
is the dominant hue, regardless of culture or nationality.
Psychologists puzzle over this basic bias for the bright side. This
sense of hope boosts consumer confidence, creates market bubbles and
spurs irrational exuberance. Two research teams exploring the anatomy
of expectations offer a new perspective on the power of a positive
outlook. For the first time, scientists at New York University have
mapped the upbeat brain — finding in a cluster of neurons the size of
a martini olive the seed of a sunny outlook on life. At its core, the
brain is built for optimism, their work suggests. (Wall Street Journal)
• As Energy Prices Soar, U.S. Industries Collide: So it goes in the sector-by-sector jousting over what to do about America’s voracious energy appetite, which shows little sign of abating despite oil’s lofty price. Yesterday, crude-oil futures on the New York Mercantile Exchange reached a new intraday high of $98.62 a barrel before falling back to finish at $96.37. Amid mounting pressure to curb fossil-fuel use — both to ease the price run-up and to address climate concerns — fights are erupting over who will bear the burden and who might win the spoils.The auto and oil industries are at each other’s throats, with Detroit saying the oil industry should install more ethanol pumps and the oil industry saying Detroit should make cars that are more efficient. Renewable-energy producers are arguing over who qualifies for federal tax breaks. In one spat, producers of U.S. biodiesel, traditionally made from soybeans, are fighting a joint bid by oil giant ConocoPhillips and meat processor Tyson Foods Inc. for access to a credit for "renewable diesel" fuel they would make from animal fat. (free Wall Street Journal)
• Crash is coming, warns top investor (The Age)
• The Bond Market’s Bleak Prognosis for Iraq: After the United States helped Iraq renegotiate its leftover debt from the Saddam Hussein era, the Iraqi government issued about $3 billion of new bonds in January 2006. These dollar-denominated bonds pay 2.9 percent twice a year and mature in 2028, paying the face value of $100. To say the least, the market for these bonds is not robust: as of last week, a bond with a face value of $100 was trading at around $60. Professor Greenstone calculated that, from the markets’ standpoint, the implied default risk over the life of the bond was about 80 percent. (New York Times)
The Wall of worry continues to build:
• Fed Chief Warns of Worse Times in the Economy:
Ben S. Bernanke, chairman of the Federal Reserve, told Congress on
Thursday that the economy was going to get worse before it got better,
a message that received a chilly reception from both Wall Street and
politicians. On a day when stock prices swung wildly, the dollar hit
another new low against the euro and further signs emerged from
retailers that consumers are growing more cautious about spending, Mr.
Bernanke warned that the economy was about to “slow noticeably” as the
housing market continues to spiral downward and financial institutions
tighten up on lending. (New York Times)`
• This week we get CPI and PPI data. Even the absurd focus on core inflation can’t hide the truth any longer, as the CRB Index, ex-Food and Energy now reveals.
• The silver lining: Will the High Price of Oil Make Americans Skinnier? (Freakonomics)
• Could California be in recession?
California is on the edge of recession, economists say. Or perhaps the
nation’s most populous state is already in one. "California seems to be
sliding into recession," wrote Jan Hatzius, chief economist for Goldman
Sachs, in a research note earlier this week. Hatzius based his
appraisal on the sharp increase in the unemployment rate in the state
from 4.7% in November 2006 to 5.6% in September 2007. While a 5.6%
jobless rate may seem low, the important thing is how much it’s risen.
Hatzius said any increase of more than 0.6 percentage points in
California’s unemployment rate has always been associated with a
national recession. (Marketwatch)
• When magazines such as Vanity Fair turn against you, you know your approval poll ratings are really, really low: The Economic Consequences of Mr. Bush Nobel laureate Joseph E. Stiglitz sees a generation-long struggle to
recoup the damages to the dollar, the economy, and the US
infrastructure: The American economy can take a lot of abuse, but no economy is invincible. When we look back someday at the catastrophe that was the Bush administration, we will think of many things: the tragedy of the Iraq war, the shame of Guantánamo and Abu Ghraib, the erosion of civil liberties. The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this page. (Vanity Fair)
• What Market Slump? ALTHOUGH there are many questions about the direction of the Manhattan real estate market, the evidence to date shows that the market remained strong last month, continuing right through the last closings. The number of sales in October was well above the number recorded during the corresponding month a year earlier although a bit behind the huge volume of sales recorded over the summer, according to a tabulation of co-op and condominium transactions that were filed with the city through the first seven days of November. The number of sales of trophy properties costing more than $4 million increased sevenfold from October 2006. (New York Times)
• Dump This House: UnloadingYour Property in a Slow Market (Real Estate Journal)
• Banks Hit Borrowers With Stricter Rules:
More banks are tightening lending standards for home buyers — even
those with good credit — and raising borrowing costs for larger
businesses, according to the Federal Reserve’s latest survey of banks’
senior loan officers.The survey, conducted in the first half of
October, involved 52 domestic banks and 20 foreign institutions. It was
the Fed’s first poll of loan officers since the summer credit crisis.
The Fed received the results by Oct. 18, ahead of last week’s policy
meeting at which it cut its benchmark interest rate by a quarter
percentage point to 4.5%.Speaking in New York yesterday, Fed Governor
Frederic Mishkin signaled little interest in additional interest-rate
cuts. He said he hadn’t seen evidence of "serious spillovers" through
the broader economy from the sharp downturn in the housing market and
the tightening of
• Housing counselors feeling market crunch:
Homeowners of all ages and income levels have fallen into trouble via
the one-two punch of a softening housing market and problems with
subprime mortgages, which are made to homeowners with weak credit.
Sometimes it’s financial mismanagement. Other times it’s a lost job,
medical issues or another life-changing event.The news isn’t getting
much better. Foreclosure filings nearly doubled nationwide in
September, and new home sales are projected to fall 23 percent this
year. (ASSOCIATED PRESS)
TECHNOLOGY & SCIENCE
• TV losing war with the mouse:
The battle for eyeballs between the home computer and the television
has reached a crucial point, a report by technology giant IBM Corp.
suggests.In study called “The End of Advertising as We Know It,” the
consulting division of IBM surveyed more than 2,400 consumers and 80
advertising firms around the world, and concluded that time spent with
the personal computer is exceeding the number of hours devoted to TV,
particularly among younger viewers.Though audiences aren’t necessarily
using the devices for the same purpose – such as watching shows online
instead of on television – tasks such as social networking, general
Internet surfing and online games are outpacing time spent flipping
channels, the report says. (Globe & Mail)
• Ghosts Of Technologies Past:
Technological ghosts linger for many reasons. Many are embodiments of
our hopes and dreams of the future, and so we let them go only with
bittersweet regret. (Forbes)
• Keith Olbermann on waterboarding and torture: Daniel Levin, the Acting Assistant Attorney General, was ordered to right a memo on torture — so as part of his research, he had himself waterboarded (its no surprise he found it was torture). For his courage, he was fired.
• Faulty memories stored differently from true ones: Whether a memory is fact or fiction may depend on where in the brain it is stored, which may explain why people sometimes swear they remember something that never happened, researchers said on Tuesday. "Generally, the memories that we trust are more likely to be correct than the ones we don’t trust," said Roberto Cabeza, a neuroscientist at Duke University in Durham, North Carolina. "However, in some cases we can be completely confident in an event that never happened," said Cabeza, whose study appears in the Journal of Neuroscience. He said memories can come from two sources: a part of the brain called the medial temporal lobe that focuses on the facts and details of a memory, or the frontal parietal network, which involves the overall gist or familiarity of a memory. (Reuters)
• What Existed Before the Big Bang? The Big Bang theory of the origin of our universe is widely accepted by the physics community. The idea that our universe started out as some infinitesimally small point, which expanded out to what we see today, makes a lot of sense. Except for one small thing. That initial point, called a singularity by physicists, is a physical impossibility. According to the models we have today, the temperature of the universe at that first moment would have had to be infinite, which mathematically makes no sense. Also, the singularity doesn’t do a good job of explaining where all the matter and energy we see today in the universe came from. So, physicists are increasingly starting to look at other branches of physics to see what they can do to replace the singularity with a more reasonable proposition, one which can actually be explained by existing science. (CBC’ s Quirks & Quarks)
MUSIC BOOKS MOVIES TV FUN!
• EMI is counting on nostalgic boomers to shell out $97 for a Deluxe edition of The Beatles Help!,
which includes all sorts of superfluous crap. They didn’t get me — I
ordered the full digitally restored and newly created 5.1 soundtrack 2 DVD version of Help! for $17 !
That’s all from a weekend of shopping in
the NorthEast, where it now gets dark before 5pm!
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