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 Linkfest: The Week Ahead

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Number of posts : 440
Registration date : 2007-07-01

PostSubject: Linkfest: The Week Ahead   Sun Sep 02, 2007 10:11 pm

Linkfest: The Week Ahead

By Barry Ritholtz Contributor

9/2/2007 1:05 PM EDT

Click here for more stories by Barry Ritholtz

Editor's note: To access some of these stories, registration or a
subscription may be required. Please check the individual links for the
site's policy.
Yesterday, we reviewed the week that was. Today, we preview the week that will be.

Summer's over, and it's back to work, back to school, back to the
usual routine. Things start off with a relatively light, 4-day work
We'll find out how the back-to-school season went, as the
retailers plan to report their August sales figures. We have already heard from Target (TGT - Cramer's Take - Stockpickr - Rating) that it's doing well, while Wal-Mart (WMT - Cramer's Take - Stockpickr - Rating)
noted that its customers were suffering from high gas prices and
housing and credit turmoil. Last week, we heard from several high-end
retailers that their part of the market is just fine, thank you very
There are still quite a few significant earnings releases ahead of us. Many of the automakers report this week, and homebuilder Hovnanian (HOV - Cramer's Take - Stockpickr - Rating) reports Thursday; expectations remain muted.

On the other hand, Apple (AAPL - Cramer's Take - Stockpickr - Rating)
has scheduled a media event for Wednesday, and expectations for enhancements
to the company's products run high. The smart money is betting on yet
more tweaks to the company's ubiquitous iPods. I actually wrote this
Linkfest on an iPod, and I am hoping they improve the speech
recognition. There are expectations that Apple will be adding
teleportation to a new model, but I suspect that's just wishful
Lots of economic releases this week:

  • On Tuesday, we'll see the ISM Manufacturing Index, along with July construction spending (yawn).
  • Wednesday will bring the Mortgage Bankers Association's purchase
    applications, Challenger layoffs report and the ADP Employment Report
    (little more interesting).
  • Thursday we'll hear from the central bankers across the pond: The
    Bank of England is scheduled for 7:00 a.m. EDT, and then we'll hear
    from the European Central Bank 45 minutes later (now I'm awake). Also
    Thursday, we'll get the Monster employment index, weekly jobless
    claims, and second-quarter productivity and unit labor costs (and
    paying attention).
  • Friday is the one you have been waiting for: the August employment
    report. As usual, I'll be doing nonfarm payroll duty that morn. We will
    also hear from a virtual parade of regional Federal Reserve bank presidents on Thursday, repeating Chairman Bernanke's message from last week at Jackson Hole.

This week, Congress returns from recess, so we've got that going for us, which is nice.

Volume over the past few weeks has been light, and with the return of the crowds, we should expect to see it pick up.

Also worth noting are several sentiment issues: Barron's Mike Santoli points out
that "the ratio of insider selling to buying has been below 10 for nine
weeks, a rarity. And TrimTabs last week noted that insiders were net
buyers of shares on six separate days this year, and four of them were
since Aug. 16. Meantime, money-market fund inflows have surged and the
American Association of Individual Investors survey Thursday showed
bears outnumbering bulls for a fourth straight week." That excess of
negative sentiment might be suggesting that potential upside action is lurking.

"But hey, enough of my yakkin'; whaddya say?" Let's get clickin'.



• Dispelling the 'Bin Laden' Options Trades:
"As if the mortgage-market meltdown wasn't enough to spook investors,
some market players expressed concerns about unusual options bets that
some observers have dubbed 'Bin Laden Trades.'" (

• The Punch Bowl Caucus:
"In the past week, a strange group has been pleading for the Federal
Reserve to return the punch bowl to the toga party -- to slash interest
rates to restart the Wall Street party." (Slate)

• The Bulls Have It!
"In fact, the eight strategists surveyed by Barron's see stocks climbing
well into 2008, despite the credit-market tumult and the policy
uncertainty of the election year. The average forecast among the eight
calls for the S&P 500 to reach 1568 by New Year's Eve, or 6.4%
higher than today's level of 1474, and even the most cautious have
penciled in hardly any downside for stocks. In contrast, their economic
prognosis is far less assured and unanimous: Three firms see economic
threats grave enough to require the Federal Reserve to slash interest
rates to 4.5%, from 5.25% today, while two others think the economy is
doing just fine. (Barron's) See also: Bullish on the inside: Corporate insiders' buying bodes well for the stock market (MarketWatch)

• Eric Bolling Bolts CNBC's "Fast Money" for Fox?

• Where's Merrill?
"Another day of carnage in the subprime mortgage sector on Wednesday,
and another day of silence from Merrill Lynch. Someone get Jeff
Edwards, the investment bank's finance chief, on the phone. It's high
time Merrill let us in on how much damage it has incurred from the
subprime mess." (CFO)

• Market Beater(?): Introducing the Barron's 400.
When you think about the history of the many Dow Jones indices, it's almost surprising that Barron's didn't already have its own index. Barron's says its 400 index "is based on the research methods of MarketGrader,
a Miami firm that rates stocks by a proprietary formula that
incorporates companies' growth profile, profitability and stock
valuation." Still, stating the new index is "built not as a mere
reference point but as a money-making tool for investors" sounds like
it could be an exercise fraught with risk. ...
• No Rush to Snap Up Lenders:
"It may be tempting to go bargain hunting, but the prevailing opinion
of investment advisers is that prices do not yet account for the
difficulties that the industry is expected to face in the months, and
possibly years, to come as the housing market deteriorates.
Opportunities are far better, they say, in diversified banks that do a
brisk mortgage business but do not depend on mortgages for the bulk of
their revenues." (The New York Times)

• Will a Fed rate-cutting program bail out Wall Street?

• Why a U.S. Subprime Mortgage Crisis Is Felt Around the World:
"But the global financial turmoil -- set off by problems with subprime
mortgages -- has prompted a backlash in some quarters against such
financial engineering. More broadly, it has led to a better
understanding of the downside of spreading risk so well -- it can be
felt in all corners of the world, unsettling hedge funds, banks and
stock markets as far away as Australia, Thailand and Germany." (The New York Times)

• US Cellular: Next In Line For Telecom Takeover?
"If Sprint (S - Cramer's Take - Stockpickr - Rating) acquired U.S. Cellular it would add 6 million subscribers to
its base, putting it up there with its two bigger competitors in terms
of size. But why would Sprint, which has struggled since its merger
with Nextel, want to make an acquisition? Analyst Gorbatenko thinks he
knows. 'When you're drowning in an ocean and someone's swimming next to
you, you latch on,' he said." (Forbes)


The wall of worry continues to build:

• Heading for the rocks: Will financial turmoil sink the world economy? "The shockwaves of the subprime mortgage crisis are still being felt in financial markets around the world. But what is the
likely longer term impact on the global economy?" (The Economist Intelligence Unit)

• Want to know what the Fed is going to do next? Here is a primer on calculating the probabilities of Fed rate moves.

• Markets Are Normalizing, Causing Dilemma for Fed: "Federal Reserve officials' decision to provide liquidity to credit
markets rather than an interest-rate cut appears to be paying off. With
the Fed supplying funds to relieve the sudden cash crunch, investors
have had time to begin to distinguish good credits from bad. As a
result, large portions of the market have begun to normalize."
(Bloomberg) See also: Normalcy Still Is a Ways Away. (Barron's)

• Milton Friedman, Meet Richard Feynman: How physics can explain why some countries are rich and others are poor. (Slate)


• On a 30-year conforming loan, fixed-rate mortgages are now 50 to 100 bps cheaper than ARMs. Looks like Wells Fargo (WFC - Cramer's Take - Stockpickr - Rating) is trying to push borrowers away from ARMs and into the higher standards of fixed-rate loans.

• Goldman Sachs Housing Forecast: Excerpts from a Goldman Sachs
research note on housing: Home Price Declines: Accelerating and Around
for a While

• Subprime Mortgage Crisis Spreading to High-End Housing Market:
"The subprime mortgage crisis is spreading to a somewhat unexpected
place: homes costing more than $500,000." (AP)


• 3 Ways to Re-Engineer the Gulf and Stop Katrina 2.0:
"The root sources of the problem in 2005 have been traced back through
the entire history of design, construction, operation and maintenance,
and have since been dubbed grand failures in engineering. But the truth
is more complex..." (Popular

• Google (GOOG - Cramer's Take - Stockpickr - Rating) twofer:


- Hey, Who's He? With Gwyneth? The Google Guy

- "Hidden inside Google Earth is a secret Flight Simulator that takes full advantage of Google's extensive satellite imagery." (TechCrunch) </blockquote>


• Berkeley Professor Robert Reich's new book, Supercapitalism gets a good review in The New York Times
today: "
does not rip into opaque hedge funds and demand their
regulation. Nor does he harp on lax government regulation of credit and
mortgage practices. On the contrary, he criticizes many of the usual
liberal fixes directed at the "excesses of the market." His book is
smart and compelling, if ultimately toothless." Reich was labor
secretary under Clinton and is a regular on "Kudlow & Company". Here are his blog and home page.

• The CD Turns 25.


Another gorgeous day! Yes, I am taking the XSR48 out again, hoping to set a new Atlantic speed record.

Enjoy the rest of your holiday 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 [email]by all means, please do.[/email]

Last edited by on Sun Sep 02, 2007 10:27 pm; edited 1 time in total
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PostSubject: Linkfest: Week in Review   Sun Sep 02, 2007 10:26 pm

Linkfest: Week in Review

By Barry Ritholtz Contributor

9/1/2007 12:07 PM EDT

Click here for more stories by Barry Ritholtz

Editor's note: To access some of these stories, registration or a
subscription may be required. Please check the individual links for the
site's policy.
Man, is it just me, or has this summer gotten
progressively whackier with each passing week? This was another
roller-coaster ride where the final tally belies the underlying action.
By the numbers, there were two big winners: Emerging-market stocks
popped 4.5%, and crude oil gained 4.1%. European stocks and
emerging-market bonds also gained, tacking on 1.5% and 1.0%,
respectively. REITs, global stocks, the Nasdaq, commodity
futures, gold, Treasuries, and corporate and junk bonds all gained less
than 1.0%, while the dollar finished the week unchanged. The Dow slipped 0.2%, and the S&P 500 lost
0.4%, while the Russell 2000 brought up the rear, losing 0.8%. All
things considered, the losses were rather tame, given the week's
mayhem. Barron's "The Trader" column had this to say:<blockquote>How
profits hold up in the wake of tightening credit will determine stocks'
trajectory this fall. "Neither a significant margin squeeze nor a
recession is in the price," says Morgan Stanley's chief U.S. economist,
Richard Berner. So "the extent of earnings disappointment will matter."

It's a long holiday weekend, and I know you have beaches and barbecues to get to, so let's get busy:



• Fed to Weigh Markets Turmoil:
"The Fed won't bail investors out of their bad decisions but will act
if market turmoil threatens economic growth, Bernanke said. Mr.
Bernanke's much-anticipated speech solidified investor expectations the
Fed will cut its target for the federal-funds rate -- charged on
overnight loans between banks -- from 5.25% when policy makers meet
Sept. 18. Markets see some probability the rate will drop to 4.75% but
several economists said a drop to 5% is more likely, accompanied by a
statement suggesting more cuts could come. Those expectations helped
boost stocks." (The Wall Street Journal) See also: Economists React to the Fed chair's speech.

• Barron's and saw yesterday's White House Rose Garden address as a political, not economic, event. I agree.


- Bailout Bandwagon. (Barron's)

- Help with the mortgage. (


• When Bulls and Bears Act Unruly on a Seesaw:
"Does it make sense for stock prices to plunge one day and soar the
next, with little in the way of new information to explain either move?
Maybe not, but it happened this week, just as it did earlier in August.
It was the first time in more than four years that the American stock
market experienced such wild swings, and could be a harbinger of a
reversal of direction in either the stock market or the economy, or
both. Or it could just show that changes in the financial system have
left many investors confused about what is going on." (The New York Times)

• How does this recent correction compare to previous action? A Historical Perspective of Recent Bear Markets.

• Tech -- That's Right, Tech -- Is the New Haven:
"Crisis? I don't see no stinkin' crisis. Oh, I understand that the rest
of you, in Manhattan, and Washington and Dubuque, you all seem to be
having trouble with these subprime mortgage thingamajigs. But out here
in Silicon Valley where the geeks, nerds, coders and billionaires live,
I simply can't find any signs of a crisis at all. I mean, have you
looked at the big-cap tech stocks lately?" (Barron's)

• The Ongoing Impact of the Housing Sector.

• Top 25 Quotes on the Credit Crisis of '07:
"The financial market globally is up to its elbows in one of the
strangest and most complicated credit crises in history. Events have
come in rapid succession with mind-numbing effect. No sooner does the
dust settle in one part of the market than it is kicked up in another.
Through it all, the reactions on the part of the participants have been
the stuff of a good financial thriller." • A look at Market Breadth - Sector A/D Lines.

• Why balance sheets are not in good shape:
"One frequent claim used to calm fears in the recent market turmoil has
been that 'corporate balance sheets are in good shape'. Judging from
the published accounts of companies the claim is justified; judging
from national accounts it is not. This marked divergence depends on the
different conventions used. In broad terms, national accounts assume
that assets are worth their cost of production, adjusted for inflation,
after a deduction for depreciation, while corporate accounts seek to
allow for market prices whenever possible." (FT)

• RealMoney's David Merkel on how The Liquidity Noose Tightens.


The wall of worry continues to build:

• Wages Up in China as Young Workers Grow Scarce:
"Chinese wages are on the rise. No reliable figures for average wages
exist; the government's economic data are notably unreliable. But
factory owners and experts who monitor the nation's labor market say
that businesses are having a hard time finding able-bodied workers and
are having to pay the workers they can find more money. And higher
wages in China are likely to lead to higher prices in the United States
-- at the mall, at the grocery, even at the gas pump." (The New York Times) See also: India's Economic Growth Accelerates, Pressuring Rates.

• Labor Picture Is Clouded. "The Situation: Employment of temporary workers has
dropped for the last six months, driven by lower demand for office and
industrial workers ... Use of temps is often viewed as a
leading indicator for the overall job market, as companies cut temps before
full-time workers on their payrolls ... The U.S. job market might be on the
verge of softening further, but lately the overall job market hasn't directly
followed the temp market." (The Wall Street Journal)

• "Capitalism without Financial Failure is Not Capitalism at All."


• Watching Matt Drudge: "He hides, but craves attention. He is prurient and prudish, powerful
and paranoid, an icon of the right who seems obsessed with making
Hillary Clinton our next president. And he has America caught in the
grip of his contradictions." (New York Magazine)

• The other side of carbon trading:
"Planting trees in Mount Elgon National Park in eastern Uganda seemed
like a project that would benefit everyone. The Face Foundation, a
nonprofit group established by Dutch power companies, would receive
carbon credits for reforesting the park's perimeter. It would then sell
the credits to airline passengers wanting to offset their emissions,
reinvesting the revenues in further tree planting. The air would be
cleaner, travelers would feel less guilty and Ugandans would get a
larger park. But to the farmers who once lived just inside the park,
the project has been anything but a boon. They have been fighting to
get their land back since being evicted in the early 1990s and have
pressed their case with lawsuits." (Fortune)

• More than 1,800 Iraqis killed in August:
"Civilian deaths rose slightly in August as a huge suicide attack in the
north two weeks ago offset security gains elsewhere, making it the
second deadliest month for Iraqis since the U.S. troop buildup began,
according to figures compiled Saturday by The Associated
Press." (Associated Press)


• Inside the Googleplex: "In America a phenomenon might claim to have entered mainstream culture only after it has been satirised on 'The Simpsons'. Google (GOOG - Cramer's Take - Stockpickr - Rating)
has had that honour, and in a telling way. Marge Simpson types her name
into Google's search engine and is amazed to get 629,000 results. ('And
all this time I thought "googling yourself" meant the other thing.')
She then looks up her house on Google Maps, goes to 'satellite view'
and zooms in. To her horror, she sees Homer lying naked in a hammock
outside. 'Everyone can see you; get inside,' she yells out of the
window, and the fumbling proceeds from there." (The Economist)

• Japan's Warp-Speed Ride to Internet Future:
"Americans invented the Internet, but the Japanese are running away with
it. Broadband service here is eight to 30 times as fast as in the
United States -- and considerably cheaper. Japan has the world's
fastest Internet connections, delivering more data at a lower cost than
anywhere else, recent studies show." (The Washington Post)

• Still waiting for your Flying Car? Its almost here. (BBC)


• RIAA v. The People: Four Years Later. (Electronic Frontier Foundation)

• In last week's Fest, a New York Magazine article noted the
score from Terry Gilliam's Brazil was showing up everywhere. Several readers pointed out that the theme is not Michael Kamen's creation, but
rather an adaptation of Tommy Dorsey's Brazil, which you can
enjoy here.

• Stay tuned, because next week I'll share with you some of the interesting books you'll want to check out this fall.


The weather looks to be utterly gorgeous all weekend, so I will be taking the XSR48 out to enjoy the surf and waves! Have a great holiday 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 [email]by all means, please do.[/email]
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