Superbowl Linkfest

Last week’s Fed panic, combined with extremes in sentiment, appears to have set at least a tradeable low. Over the past 10 days, from trough to peak, the Dow, S&P and Nasdaq all moved 10% or better.

Hotnot_20080201
About half of that came about this week. The Dow gained 536 points, or 4.4%, to 12,743 for its best week since 2003. The S&P 500 also had its biggest weekly gain in ~five years — about 4.9%. The big winners were REITs (+6.3%), and the perenially weak Russell2000  (+6.1%). The Nasdaq ended a five-week losing streak (+3.7%) whlie Global stocks (+3.3%) also did well.

Gold was marginally down for the week (0.2%); Crude oil lost  nearly 2%. The dollar added to its woes, falling nearly 3/4 of a %, bringing its  shrinkage to 9.2% over the past year.

Barron’s Trader column had this to say:

CAN THIS STOCK BOUNCE be trusted? The S&P 500 skidded to its January low accompanied by the kind of heavy selling often seen at stock-market bottoms. For example, the crop of New York Stock Exchange stocks falling to 52-week lows had swelled to 859 — near levels seen in July 2002.

Last week, citing the "sharp decline in the stock market combined with soaring values for high-quality bonds," LPL Financial nudged up its allocation to stocks to 70% from 65% while cutting bonds. A week earlier, Banc of America Securities prodded its stock allocation up five percentage points to 65%. Nearly all Street firms’ allocations are still below their peak levels.

Healthy corporate balance sheets, hardly-exorbitant valuations and crouching sovereign wealth funds waiting to pounce all should limit downside stock risk in this correction. Also, "the benefit of emerging markets to the global economy is probably greater than in prior bear markets," notes Goldman Sachs strategist David Kostin.

On the other hand, the correction might eventually prove more severe, since investors are facing the kind of credit degradation not seen in previous pullbacks, and housing prices are still 10% to 30% above fair value. "Declining employment, falling consumer confidence and high oil prices strongly suggest consumer spending will slow," he says. Profit margins near all-time highs of 8.2% also could slip toward the 30-year average of 5%.

Enough Ben Steinery! We have a football game to watch !

INVESTING & TRADING

U.S. Stocks Post Biggest Weekly Gain in Five Years U.S. stocks rose the most in five years after the Federal Reserve’s second interest rate cut in nine days boosted banks, homebuilders and retailers.  (Bloomberg)

Even With Fresh Rate Cut, a Bear Market Awaits: But when so much is being made about what
the Fed is doing by not only stock-market pundits but also mainstream
news and even politicians, we have to step back to let the dust settle.
From a charting perspective, the stock market is at a very critical
juncture with the Standard & Poor’s 500 facing very stiff
resistance
(Barron’s)   

What Investors Need to Know About Historical Data  (TheStreet.com)

Tiger’s Julian Robertson roars again: As I learned in a series of
conversations with Robertson over the past six months, the man once
known as "The Wizard of Wall Street" for the incredible success he had
running his hedge fund firm Tiger Management has been on a magical run
while most of the world wasn’t watching. According to returns provided
by Robertson exclusively to Fortune, he earned a stunning 76.7% return
in 2007 managing a multi-billion-dollar portfolio of his own money.
(Fortune)   

Financial Sector: More Damage to Come   

The Bubble Bursts:
Our economy is in serious trouble,” writes Eric Janszen in the cover
story for the February Harper’s. “Both the production-consumption
sector and the FIRE [finance, insurance and real estate] sector know
that a debt-inflation Armageddon is nigh, and both are praying for a
timely miracle, a new bubble to keep the economy from slipping into a
depression.”  (Harpers)         

Say Farewell To Ben Stein   

Cash of the Titans: You can’t lose a fortune unless you have it in the first place.  Wall
Street moguls’ stock holdings in their own companies lost them a
combined $842 billion since the frothy days of just last year. Who
escaped the least scathed? Citigroup’s new CEO, Vikram Pandit, who
didn’t get his shares until January 22. (NY Magazine)

HomeBuilders vs Financials 

The Market’s Echo Chamber: Call
it the rise of financial populism. Cramer is its biggest star and, in
some ways, it has fundamentally altered the climate in which the
Federal Reserve makes economic policy. Throughout its history, the Fed
has rarely been popular (the peaceful period in the 1990s under Alan
Greenspan was an exception). People often blame the Fed for recessions
or high interest rates. But traditionally, politicians, business
leaders and unions have been the most vocal critics. (Newsweek)

"Reports of decoupling have been greatly exaggerated."   

The Bond ‘Transformers’ Troubles at U.S. bond insurers are forcing industry regulators to rethink a decade-old legal loophole that allowed insurers to venture into the obscure world of derivatives. The housing downturn is threatening to cripple some bond insurers that wrote billions of dollars of guarantees in the past few years on securities backed by risky subprime-mortgage debt. They entered into contracts known as credit-default swaps, which are derivative instruments that require firms to pay out money when a bond defaults. The ability of bond insurers to make good on their guarantees is in question.  (WSJ)

A list of all time Trading losses (wikipedia) It runs out your snafu with Enron, WCOM, LU, PETS was, relatively speaking, minor.

• From the people who brought you Mortgage-iplode-o-meter, comes: Bank Implode

Down to the Last Drop of Profit Growth:
Stocks are allegedly cheap now, at 17 times 2007 earnings. Unfortunately, the cheapness argument falls on its face once we realize
that pretax profit margins are hovering at an all-time high of 11.9%,
almost 40% above their average of 8.5% since 1980. Once profit margins
revert to their historical mean, the "E" in the P/E equation will
decline. If the market made no price change in response, its P/E would
rise from 17 to 23.8 times trailing earnings. (Barron’s)

For the Fed, Credit Counts More than Stocks: "It is very clear — if it wasn’t before — that the Fed is now on a mission," writes David Rosenberg, Merrill Lynch’s North American economist. "At no time in the past three decades have we seen 125 basis points of rate cuts in a week."The Fed seems to be looking beyond the rally in equities — perhaps, like us, seeing it as a technical short-covering bounce more than anything else — and focusing on the deterioration in the credit markets," Rosenberg adds. (Barron’s) 

Ackman Devoured 140,000 Pages Challenging MBIA Rating: (Bloomberg) — It was the $109,000 photocopying bill that hedge fund manager William Ackman says made him realize how much he’d read and underlined before betting against bond insurer MBIA Inc. in 2002. His law firm charged him for copying 725,000 pages of financial statements and other documents, 140,000 of them about MBIA, to comply with a subpoena. Following New York and U.S. probes of his trading and reports, Ackman persisted in challenging MBIA’s AAA credit rating for more than five years, based on his own research. (Bloomberg)

A Growth Maven’s New Favorite: Gold: Compare gold with the value of the Dow Jones and the value of the dollar, it’s not up nearly as much as one might think. At most tops in gold, gold and the Dow Jones Industrial Average sell at the same price. Right now, gold is about one-fourteenth the price of the Dow. We are denigrating the value of our currency at a much faster rate than we have in the past. One has to come to decisions on how to protect the value of money. Cash is king in the minds of some people. But the biggest question associated with that decision is what currency do you keep your cash in? (Barron’s)

• Has Barton Biggs become a survivalist nut? Dude: Settle the F%$# Down
 


ECONOMY

The Wall of worry continues to build:

• An open letter to the FOMC chair Dear Ben . . .   

IMF Forecasts Global Slowdown As U.S. Provides Primary Drag: The U.S. will skirt a recession this year, the International Monetary Fund predicted, yet American growth will slow sharply enough to drag on economies around the world. In its latest forecast, the IMF said U.S. economic growth will slow to 1.5% in 2008 from 2.2% last year. Largely as a result, the IMF expects world-wide growth to decline to 4.1% this year from 4.9% in 2007. That means, in essence, that the problems caused by the U.S. housing slump and meltdown in the market for subprime mortgages are radiating globally. (WSJ)

U.S. payrolls: Negative 17,000 + Huge Downward Revisions for 2007   

Fed May Cut Rate Below Inflation, Risking Bubbles — The Federal Reserve may push
interest rates below the pace of inflation this year to avert
the first simultaneous decline in U.S. household wealth and
income since 1974. (Bloomberg)

BLS Overstated Job Creation by 14.38% in 2007

• Harvard Prof Ricardo Hausmann: Stop behaving as whiner of first resort macroeconomic policy should not be based on a panicky attempt to avoid a 2008 recession at all costs but on a forward-looking strategy that achieves the needed reduction in consumption at the lowest cost in terms of the stable growth. This is not achieved by giving US households a $1,000 cheque by April, a trick that no macro­economic textbook would argue is particularly effective. If there is fiscal room – a big if, given the weak structural position of the US government and its likely cyclical worsening – it would be better spent in accelerating investments in plant and equipment via accelerated depreciation schemes, to improve the capacity of the economy to keep on growing after the crisis. (FT)

4th Q GDP: El Stinko 

The U.S. Economy Faces the Guillotine: The Great Global Market Freak-Out of 2008 has everyone asking whether the United States—already on the road to recession—is entering into a protracted period of economic trouble where jobs will be slashed, prices will continue to rise and the dollar will keep falling; and if so, whether the declining U.S. economy will pull the rest of the world down with it. (Newsweek)

BE YOUR OWN ECONOMIST

China’s Inflation Hits American Price Tags: China’s latest export is inflation. After falling for years, prices of Chinese goods sold in the United States have risen for the last eight months. (NYT)

Bond Insurers Face Downgrade Despite Call for Delay

Wall Street Embraces Government to Avoid Recession:
The worst drop in new home sales on record has turned financial leaders
into champions of big government with everyone from Russo to executives
at Citigroup Inc. and JPMorgan Chase & Co. supporting public
measures to keep the housing market from sinking the economy. It’s a
change from Wall Street’s usual stance that markets work best without
government interference. "Sentiment can change when there’s money on
the line, even in an industry that up to now has been doctrinally
opposed to government having a role in the markets,” said Thomas
Schelling, a Nobel laureate in economics who taught at Harvard
University for 30 years. (Bloomberg)

U.S. sales slowdown hits McDonald’s

In America, land of the bubbles, the next pop will be the biggest: This new ideology is extremely dangerous: It assumes
the American economy can no longer be managed by politicians or Wall
Street quants. The "new economy" has a life of its own, a "Terminator"
from a dark future, an "I, Robot" from Asimov’s sci-fi world. Yes, our economy has
become a self-sustaining "bubble-blowing machine" inventing new bubbles
at warp-speed even before the last is buried, in endless reincarnations
of Schumpeter’s "creative destruction" cycles.
(Marketwatch)



HOUSING

• BusinessWeek cover story:  Housing Meltdown:  Why home prices could drop 25% more on average before the market finally hits bottom   

More Bogus Numbers from the Mortgage Industry 

I’ll Buy Your House If You Buy Mine: Fans say swapping is suited to the current down market, where people are extra nervous about buying a new house before selling their old home. (Real Estate Journal)

Housing Downturn Takes A Toll On Land Prices for the land beneath the housing bubble have sunk under the weight of the mortgage mess, with vacant lots becoming hard to move.
Property analysts say the quagmire hasn’t engulfed nonresidential land, though, and some big investors are still bulls. The ones having the tough time are home builders, banks and small investors who aimed to flip property at a profit. Housing is clearly where it hurts: National home builders bought up land at the peak of the housing boom in July 2005, in an attempt to beat further price increases. But instead of land appreciation, they’ve seen prices fall all across the U.S. by varying amounts, says Gopal Ahluwalia, vice president of research for the National Association of Home Builders. (IBD) 

• Site of the Day: You Walk Away Dot Com

Applications for Refinancing Mortgages Increase:  Homeowners’ applications to refinance loans surged again in the
Mortgage Bankers Association’s latest survey of filings, rising 22.1% last week
from the previous one. According to the survey, refinancings accounted for 73% of the
total number of mortgage applications filed during the week ended Friday, up
from 66% the previous week.  Applications for new mortgages to buy homes decreased by a
seasonally adjusted 17.7% on a week-to-week basis. (Real Estate Journal) 


WAR/MEDIA/POLITICS/ENERGY

Herb Greenberg Calls Out Larry Kudlow

US Envoy: Iran Gained From US Invasions:
is stronger today because of the U.S.-led invasions of Afghanistan and
Iraq, the American ambassador to the United Nations said Friday. The
2003 invasion of Iraq removed a key rival of Shiite Iran with the
ouster of Saddam Hussein’s Sunni-dominated government. Iran has
friendly ties with the Shiites now in power in Iraq. (AP)   

With Super Tuesday just 48 hours away, we went heavy on some interesting election articles:

With most Super Tuesday contests open, independents to play role in picking the winners More than half the states holding presidential contests next month on Super Tuesday allow unaffiliated voters to participate, giving millions of independents a chance to shape what is usually an insider affair among Democratic and Republican loyalists. (AP) 

• WTF?!? Ann Coulter endorses Hillary Clinton (YouTube!)

FundRace2008 makes it easy to search by name or address to see which presidential candidates your friends, family, co-workers, and neighbors are contributing to. Or you can see if your favorite celebrity is putting their money where their mouth is.   

Why Republicans Like Obama Barack Obama is not only popular among Democrats, he’s also an appealing figure to many Republicans. Former GOP House member Joe Scarborough, now a host on MSNBC, reports that after every important Obama speech, he is inundated with e-mails praising the speech — with most of them coming from Republicans. William Bennett, an influential conservative intellectual, has said favorable things about Obama. So have Rich Lowry of National Review and Peggy Noonan. And so have I. A number of prominent Republicans I know, who would wage a pitched battle against Hillary Clinton, like Obama and would find it hard to generate much enthusiasm in opposing him. What is at the core of Obama’s appeal? (WaPo)

White House 2008: General Election Polling 

The Line on Running Mates:  Although neither party has settled on a nominee just yet, the speculation about who will be No. 2 on the ticket has already begun in earnest. Until we have nominees, the vice presidential Line will focus on the likeliest veep picks (in alphabetical order) for the candidates still in the running. Once a nominee for each party is picked, we’ll start ranking the VP "candidates" from most likely to least likely to be selected. (The Fix)

Legacy of Deficits Will Constrain Bush’s Successor: Despite his efforts, Mr. Bush failed to work out a deal with Congress to tackle the spiraling costs of government health and retirement programs. The next president, if he or she serves two terms, could find the U.S. government so deeply in hock that it would face losing its Triple-A credit rating, something that has never happened since Moody’s Investors Service began grading U.S. securities in 1917.As a result, the ambitions of Mr. Bush’s successor to cut taxes, institute universal health care or aid troubled homeowners might have to give way to the reality of soaring costs for Social Security, the Medicare program for the elderly and the Medicaid program for the poor. (Free WSJ)

In Campaign 2008, Pollsters Are Biggest Losers The expected huge voter turnout in next week’s Super Tuesday primaries is likely to cause red faces among pollsters — again. The polling industry missed Hillary Clinton’s comeback in New Hampshire, vastly underestimated Barack Obama’s victories in Iowa and South Carolina, and overestimated John Edwards’s strength in Nevada by a factor of four or five. On the Republican side, John McCain did better in South Carolina than most polls predicted, Mike Huckabee did better in Iowa, and Mitt Romney shredded the predictions in the Nevada caucuses. (WSJ)


TECHNOLOGY & SCIENCE

• The Microsoft Yahoo (Micro-Hoo!) takeover announcement dominated Friday’s news. Here’s some interesting writings on the deal:

Microsoft/Yahoo: Data on Properties vs Search Traffic (Infectious Greed)

Micro-Hoo!™: Desktop vs Internet (Big Picture) 

Why Yahoo! Can’t Fix Microsoft (Forbes) 

Microsoft’s Inner Thoughts on Online Advertising (Bits)

Yahooligans at the Window (Newsweek) 

A Giant Bid That Shows How Tired the Giant Is: This is Microsoft we’re talking about, and if its proposed acquisition of Yahoo signals anything, it serves as a confirmation that Microsoft’s glory days are in the past. Having failed to challenge Google where it matters most — in online advertising — it has been reduced to bulking up by buying Google’s nearest but still distant competitor. In many ways, the company has become exactly what Bill Gates used to fear the most — sluggish, bureaucratic, slow to respond to new forms of competition — just as I.B.M. was when Microsoft convinced that era’s tech behemoth to use Microsoft’s operating system in its new personal computer. (NYT) 

Is the Tipping Point Toast?   

Ditching Vista: How To Downgrade To Windows XP   

•  WTF California?  Sunnyvale homeowners told to cut redwoods that block solar panels    

• A company receives a patent for "a mobile entertainment and
communication device
" on Monday the 22nd then, at 12:01 a.m. the next
day sues Apple, Nokia, RIM, Sprint, AT&T, HP, Motorola, Helio, HTC,
Sony Ericsson, UTStarcomm, Samsung and a bunch of others.

Pigs Could Be the Salvation of Diabetes Sufferers (Scientific American)

Origin of the Specious: Why do neoconservatives doubt Darwin?

Discovery backs theory oil not ‘fossil fuel’   

100 Posts for Organizing Your Life (bootstrapper)   



MUSIC BOOKS MOVIES TV FUN!

• Shelby Lynne’s Just A Little Lovin‘ is a new
album of Dusty Springfield covers sounds — it sounds great. (You can stream most of the album here: Shelby Lynn)   

WGA Strike: An end in sight? (Variety) 

Study says many studies suck 

Sarah Silverman has something to tell Jimmy Kimmel. Just frickin hilarious.

• This is much more than an ordinary retail display page (fun!)

FailBlog — crude, but amusing . . .

• Ever wonder what 5 feet of snow in 5 days looks like? Check out i90 SNOQUALMIE PASS, Wash (flickr)

 

That’s all from the NorthEast, where we gladly take the Giants and 12 . . .

~~~

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The linkfest loves to get email!  If you’ve got something to say,
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What's been said:

Discussions found on the web:
  1. Dave commented on Feb 3

    BTW… for the record… True dynasties never lose Superbowls (or cheat for that matter).

    Congrats Barry.

  2. zero529 commented on Feb 3

    I’ve complained here before about shrinking cartons of ice cream (what?!? a half gallon is now 56 oz?).

    Now I’ve noticed that molasses isn’t what it used to be. My jar from a year or two ago says each tablespoon contains 15 g sugar. I bought a new jar today (same brand, etc.) and it now contains just 10 g sugar. It’s like my molasses ain’t molasses anymore (which is trouble for my basement science). I’m paying for what, 30% more water?

    Don’t worry, inflation ex-molasses is under control.

  3. John commented on Feb 3

    Well, being a Redskins Fan I have to say that tonight I’ve never routed for the Giant’s so hard in my life. Was out at a Superbowl Party (25-30 people) in Virginia and not one (NOT ONE) person was routing for a Patriots win.
    Can’t imagine why. All the ESPN pundits pro-claiming how the Patriots are (were) the greatest team ever… Having to endure Tom Brady’s season long whiny little expressions coming off the field after not scoring a touchdown. Belichek’s downright arrogance and demeanor…Tonight he looked like a sore looser.
    The Giant’s Defense brought pressure all night on Brady — from beginning to end, and Planted his Ass in the Dirt on several occasions. It was good to see Jeff Feagles, Manning and Tom Coughlin get a Superbowl win–especially after the constant berating Coughlin has taken in N.Y.
    Greatest Team Ever huh??? Well the Giants just shoveled a HUGE Steaming PIle of DogSh*t onto that theory…
    I think a Large Portion of the Country is going to sleep pretty well tonight….

  4. Jeff commented on Feb 4

    Was there any positive economic news last week? ISM? Durable goods?

    If there had been no Birth/death adjustment, what would the error in BLS forecasts have been? Better or worse than 14.38%?

    Any progress last week on bond insurers?

    Any economists seeing improved prospects?

    Any companies seeing good earnings and a normal economy — not just McDonalds? There were a few other reports….

    Any chance that the Fed moves might help the economy? For a while before the inflation hits? Any respite before the next bubble?

    Are there any stocks or sectors that fit your current views on the economy? Recession play? No tech, no cyclicals? Gold?

    Just wondering….

  5. SINGER commented on Feb 4

    GEEEEEEEEEEEEE MEN!!!!!!!

  6. wunsacon commented on Feb 4

    >> Discovery backs theory oil not ‘fossil fuel’

    The bio from the “reporter” writing the article on “worldnetdaily”:
    ————
    Jerome R. Corsi is a staff reporter for WND. He received a Ph.D. from Harvard University in political science in 1972 and has written many books and articles, including his latest best-seller, “The Late Great USA.” Corsi co-authored with John O’Neill the No. 1 New York Times best-seller, “Unfit for Command: Swift Boat Veterans Speak Out Against John Kerry.” Other books include “Showdown with Nuclear Iran,” “Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil,” which he co-authored with WND columnist Craig. R. Smith, and “Atomic Iran.”
    ————

    Whatever the rate of alleged abiotic oil production, it’s certainly not replenishing the stripper wells in Texas or the North Sea oil fields, where folks are next working on exploiting the gas caps now occupying the space where there used to be oil.

    I went to theOilDrum.com, to see what they say about abiotic oil. For them, debunking “it’s-a-myth-that-oil-is-a-finite-resource” arguments is a frustrating game of whack-a-mole that deters sensible public discussion and policy planning.

    Tangentially, this guy reminds me of the editor for a GW “debunker” website, who says GW is junk science. What is that guy’s bio? It included work downplaying second-hand smoke on behalf of the tobacco industry. Nice track record. Sure inspires confidence.

  7. ali Beladi commented on Feb 4

    MSFT’s purchase of Yahoo reminds me of Viacom’s stupid purchase of AOL and the subsequent immense destruction of stock holder’s Loss of Capital.

    1 – GOOG’s search technology is the secret to their great rise and becoming the greatest company since Adam and Eve migration from the heavens to Earth.

    Niether Yahoo, nor MSFT has such a secret super search technology. Therefore the combination will be cause massive share holder loss. That means MSFT stock holders will see their stock slide to $15 (50% haircut) within two years or less.

    May be Bill gates and Balmar are not as smart as they look.

    Viacom paid close to $200,000,000 for AOL. They can’t even give it away for free today, less than 7 years later.

    MSFT is on it’s way to becoming an old loser.

  8. Greg0658 commented on Feb 4

    • Study says many studies suck

    has a banner for mycokerewards.commmmmmm
    its on my email server too

    there outta be a law that if a banner hijacks a website download for more than a second you can send them a bill for your time

  9. Paul in NYC commented on Feb 4

    Heh. Patriots still among the best teams ever.
    NFC win says the markets are up? Doubt it this year.

  10. Justin Diamond commented on Feb 16

    I was lucky enoough to go the Superbowl, thanks to the great price I got the Superbowl tickets for at Swickets.com.

    Giants are Superbowl Champs!!!
    Giants are Superbowl Champs!!!
    Giants are Superbowl Champs!!!

    Patriots are 18-1.

  11. Justin Diamond commented on Feb 16

    I was lucky enoough to go the Superbowl, thanks to the great price I got the Superbowl tickets for at Swickets.com.

    Giants are Superbowl Champs!!!
    Giants are Superbowl Champs!!!
    Giants are Superbowl Champs!!!

    Patriots are 18-1.

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