Yesterday, we looked at the week that was. Today, we preview the week that will be.
We have an abbreviated week coming up: Wednesday is a big travel day, so expect volume to tail off after 2pm. All US markets are closed on Thursday for the holiday. Friday markets open for a half day, closing at 2pm. The thin volume is easily pushed around, occasionally resulting in big moves on black Friday.
Earnings for Q3 wind down. The last of the Dow components to report, Hewlett-Packard (HPQ), releases earnings on Monday. Also on Monday, Lowe’s Cos (LOW). Some analysts expect them to follow Home Depot’s lead and lower guidance for next quarter.
No one is expecting much of anything from the nation’s largest
homebuilder, D.R. Horton (DHI) on Tuesday. Sales have been cut in half,
and their cancellation rate is ~48%. Also reporting on Tuesday: Freddie
Economic data is stacked, mostly on Wednesday. Nothing Monday,
Housing Starts and FOMC minutes Tuesday, and on Wednesday, a deluge
Jobless Claims, Consumer Sentiment, Leading Economic Indicators, EIA
Petroleum & Natural Gas Reports. Then Turkey day, then Retailing bonanza known as Black Friday.
The WSJ noted:
Retailers will ring in the holiday shopping season the day after Thanksgiving, but it’s not clear whether the hype and discounts on "Black Friday" will add up to a merry Christmas.
The early-morning ritual is expected to deliver steep markdowns on everything from winter coats to digital cameras, and there’s reason to believe promotions will be impressive: Wal-Mart Stores this year began its Black Friday discounts three weeks early, with specials including a laptop for $348.
But some industry observers detect a dark side to this year’s discounts. Having endured a stubbornly warm fall, many apparel retailers are stuck with mounds of unsold fashions as the Christmas season begins. Meanwhile, a crunch in housing and credit, as well as soaring energy prices, have put a lid on consumer cheer. Shoppers have become more obsessed with bargains than last year, and that doesn’t bode well for retailers’ fourth-quarter profits . . ."
Enough Ben Steinery! On with the linkfest.
INVESTING & TRADING
• For solar power, the future looks bright: Today, like the rest of the solar energy industry, SunPower is heating up. With electricity prices rising, worries about global warming mounting, and the cost of solar energy falling, the business of making electricity from the sun is about to go mainstream in a big way. The Holy Grail of solar is a concept called "grid parity" – meaning that it costs no more to generate your own solar energy than it does to buy electricity retail, off the grid – and there’s smart money betting that solar will get there soon. (Fortune Magazine)
• When bad news is good news for bulls: Ever-building pessimism actually increases the confidence of contrarians that a major bear market is not about to begin.
Consider the latest readings of the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average recommended stock market exposure among a subset of short-term market-timing newsletters tracked by the Hulbert Financial Digest. As of Monday night, the HSNSI stood at minus 2.5%, which means that the editor of the average short-term market timing newsletter is now allocating 2.5% of his portfolio to shorting the market – a bet that the market will continue declining. (Marketwatch)
• Lehman, Bear Stearns Are Ripe for European Offers: Once in a generation, an opportunity
arises to make a transformational acquisition at a bargain price. One is staring Europe’s banking chiefs in the face right
now. The question is whether they have the courage to grab it. The deal? Buying a Wall Street investment bank. (Bloomberg)
• 9 funds from the ETF bargain bin (Morningstar)
• Buffett: Tax my kin, please: Warren Buffett has said it before
and he’s likely to say it again to Congress on Wednesday: He thinks the
heirs of the wealthy should be taxed on their inheritance.
• Uh-oh. It’s Enron all over again: Start with the headlines about off-balance-sheet entities known as structured investment vehicles, or SIVs (or sieves, as some wags are calling them). As Gertrude Stein never said, an off-balance-sheet vehicle is an off-balance-sheet vehicle is an off-balance-sheet vehicle.Just as Enron’s off-balance-sheet vehicles were propping up its stock price by camouflaging the company’s real financial results, so SIVs were inflating the credit market by providing demand for the complex securities created out of mortgages and loans used to finance buyouts. (Fortune)
• Treasuries Rise to the Highest in Two Years on Credit Concern:
Treasuries rose to the highest since 2005 as credit-market losses
related to delinquent subprime mortgages drove investors to the safety
of government debt. Two-year notes gained for a fifth straight week,
extending their rally to the longest in eight months on speculation the
Federal Reserve will cut borrowing costs a third time this year. The
Fed will release minutes of its October meeting next week, and the
Commerce Department is expected to report that housing starts fell to
the lowest since 1993. (Bloomberg)
• The Next Shoe to Drop in the Credit Meltdown: Commercial Real Estate: While everyone’s attention is concentrated on subprime and other residential mortgages, as first reported by this blogger this past July the next shoe to drop – in the mortgage and credit crunch saga – will be commercial real estate (CRE); indeed investors’ worries and panic are now shifting towards CRE and its related securitized products (CMBS and CMBX).
• Subprime Hits Seem Likely to Keep Coming:
Just weeks after some of the world’s largest banks took tens of
billions of dollars in losses on their holdings of debt linked to
tainted mortgages, a new concern is emerging: It might not have been enough.
Expectations are growing that UBS AG may face fourth-quarter
write-downs of as much as eight billion Swiss francs, or $7.11 billion.
Investors and analysts believe that Citigroup Inc. may face more pain
after announcing last week that it expected to take write-downs of $8
billion to $11 billion in the fourth quarter. In the third quarter,
Citigroup recorded mortgage-related write-downs of $1.8 billion, while
UBS took 4 billion francs in losses. (WSJ)
The Wall of worry continues to build:
• Gavekal’s four scenarios for what lies ahead: The markets right now are facing an unusually high level of uncertainty, whether it be about future growth, the nature of banks’ balance sheets, the ultimate impact of the housing slowdown, the ability of banks to extend future loans…and, of course, how the new Fed chairman will react to all of this. (FT)
• Data Point to Weak Holiday Sales: Economists Predict Season Could Be Worst in 5 Years
As Consumers Pull Back: Pinched by rising fuel and food costs and declining
home prices, consumers are starting to tighten their grip on their
wallets, prompting economists to predict this holiday sales season will
be the worst in half a decade. (WSJ)
• A WSJ Smackdown:
• Fed’s Kroszner Indicates Rate-Cut Chances Are Slim:
Federal Reserve Governor Randall Kroszner on Friday sent perhaps the
clearest signal yet that the Fed is not inclined to cut rates further
even if the economy hits a "rough patch," as he expects. "The
current stance of monetary policy should help the economy get through
the rough patch during the next year, with growth then likely to return
to its longer-run sustainable rate," Mr. Kroszner said in prepared remarks to the Institute of International Finance in New York. see also Commodity Prices Creating Inflation Risk, Fisher Says
• The war over inflation. Yeah, thats right — me in FP. Suck it, inflation weenies.
• Foreclosures Hit a Snag for Lenders: A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers and raising questions about the legal standing of investors in mortgage securities pools. Judge Christopher A. Boyko of Federal District Court in Cleveland dismissed 14 foreclosure cases brought on behalf of mortgage investors, ruling that they had failed to prove that they owned the properties they were trying to seize. (New York Times)
• Foreclosure filings: No slowdown yet: Three states, California, Florida and Ohio, continue to dominate new foreclosure filings, as most of the nation saw increases in the third quarter, according to a new survey. During the period ended Sept. 30, 77 out of the nation’s 100 largest metropolitan areas reported rises in delinquencies compared with the previous three months, according to the latest report from RealtyTrac, an online marketer of foreclosure properties. (CNN/Money) See also California Cities Lead In Foreclosure Rates
TECHNOLOGY & SCIENCE
• Great meme-based research: Google: Cool or Evil ?
• ‘Cows of the Mesozoic’ era discovered Chicago researchers have identified the fossil of a 110-
million-year-old dinosaur with a mouth like the business end of a
Hoover vacuum cleaner to feed its voracious appetite for grass, ferns
and other low-lying greenery. The wide, flat mouth of the Nigersaurus taqueti
was lined with as many as 500 tiny, sharp teeth that enabled the animal
to trim large areas of vegetation like a power lawn mower. (Los Angeles Times)
• Poker Bots on the Rise: But the rise of gambling bots may soon depress online poker participation for a very different reason. In the very near future, online poker may become a suckers’ game that humans won’t have a chance to win. Bots are quite scale-able and it will be virtually impossible to prohibit computer or computer-assisted online playing. (Freakonomics)
• Cat with 2 faces (video)
MUSIC BOOKS MOVIES TV FUN!
• The Mothership has landed: Mothership, Led Zeppelin’s new 2CD/1DVD release, has raced up the Amazon sales charts:
Amazon.com Sales Rank: #12 in Music
#1 in Music > Classic Rock > Arena Rock
#1 in Music > Rock > Blues Rock
#1 in Music > Hard Rock & Metal
For those of you who may want something more modern, check out Radiohead’s cover of the Smiths
• Kyle Lograsso, golf prodigy (be sure to watch til the end).
• The book Gertrude Bell: Queen of the Desert, Shaper of Nations is reviewed in NYTRB:
When the British needed a senior political officer in Basra during
World War I, they appointed a forty-six-year-old woman who, apart from
a few months as a Red Cross volunteer in France, had never been
employed. . . This
country, created in 1920 from the three Ottoman provinces of Baghdad,
Basra, and Mosul, which were conquered and occupied by the British
during World War I, was given the status of a British mandate and
called Iraq. The Queen of the Quagmire
That’s all from what may very well the first real weekend of Autumn in
the NorthEast — brisk weather, beautiful foliage colors, falling leaves — only about a month late!
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