Linkfest: Week in Review
By Barry Ritholtz
RealMoney.com Contributor9/1/2007 12:07 PM EDTClick 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."
</blockquote>
It's a long holiday weekend, and I know you have beaches and barbecues to get to, so let's get busy:
<blockquote>
INVESTING & TRADING•
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
Economist.com saw yesterday's White House Rose Garden address as a political, not economic, event. I agree.
<blockquote>
-
Bailout Bandwagon. (
Barron's)
-
Help with the mortgage. (
Economist.com)
</blockquote>
•
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.
ECONOMYThe 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." WAR/MEDIA/POLITICS/ENERGY•
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)
TECHNOLOGY & SCIENCE•
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)
MUSIC BOOKS MOVIES TV FUN!•
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.
</blockquote>
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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Sun Sep 02, 2007 10:11 pm