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Weekend Reading

Paul Kedrosky

Good Sunday morning, and welcome to Weekend Reading. As always, here are some articles and papers worth reading. First, however, a look back at the week that just finished, and a look forward to the week ahead.

It was a mixed week for the major markets, with the Dow losing 0.9%, its worst weekly decline since last August. The S&P 500 fell 0.3%, and the Nasdaq was up 0.7%.

Looking forward to next week, there's plenty of positive sentiment as we head into the final month of the first quarter. Crude oil is proving to be worrisome, however, and the continued tension over Iran's nuclear program is not likely to improve things in the near term. With the indices at or near their highs for the year, stocks may have some trouble punching even higher, so look for the indices to remain mixed next week, with oil as the spoiler.

Turning to economic indicators, it will be crazy busy. On Tuesday, The Conference Board plans to release its consumer confidence index for February. The consensus is that it will decline slightly from January. Also Tuesday, we are due to see January durable goods orders. Then on Wednesday we will get another read on fourth-quarter gross domestic product, with most people expecting it to be revised down somewhat. At the same time we will see the core PCE price index, which is expected to be 2.1%, about even with its last reading. On Thursday, domestic car and truck sales data for February are set for release, along with the Institute for Supply Management's February manufacturing index.

Looking to earnings, there will be a lot of retailers reporting, including Federated(FD Quote), Target(TGT Quote), Gap(GPS Quote) and Kohl's(KSS Quote). Others reporting next week include Dell(DELL Quote), American International Group(AIG Quote) and CBS(CBS Quote).

Finally, here are some articles and papers worth reading:

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• KKR and Texas Pacific's deal for for TXU(TXU Quote) will set a record. (CNBC)
• Dissident Yahoo!(YHOO Quote) shareholder group (with 45 shares) submits restructuring plan. (Mercury News)
• Markets wrongheadedly pay attention to headline rounded numbers in news releases. (FRB)
• Drug interactions identified as major pharma risk factor. (The New York Times)
• Smaller universities are significantly increasing their endowment allocations to hedge funds and private equity. (Pittsburgh Tribune-Review)
• Automakers are going green without improving mileage. (The Washington Post)
• The financial market's quest for exotic beta is fun, but unlikely to end well. (The Economist)
• The carry trade shouldn't work as well or as long as it does, but it does. (The Economist)
• Entertainingly combative interview with financial advice guru Suze Orman. (The New York Times Magazine)
• The likelihood of a big rock smashing the Earth is being revised upward. (The Economist)
• TrimTabs' surprisingly successful supply/demand models for stock. (Forbes)
• Transcript of interesting recent speech by Chevron(CVX Quote) CEO David O'Reilly. (CERA)
• Getting hedge fund returns on the cheap. (Bloomberg's Mark Gilbert)
• Barron's picks boomer stocks like Walgreen(WAG Quote) but pans Applebee's(APPB Quote). (Barron's)
• There is surprisingly strong momentum in weekly stock returns. (Journal of Finance)
• Sales of vacation homes sink 37% in 2006. (Los Angeles Times)
• Air conditioners in China and India are the latest threat to the ozone layer. (The New York Times)
• Activist Carl Icahn has filed four proxies in one season, an investing record. (BusinessWeek)
• Inflation column gets its writer a marriage proposal. (Bloomberg columnist Caroline Baum)
• The American Stock Exchange has one last chance to get it right. (Los Angeles Times)
• H-P's(HPQ Quote) Mark Hurd gets a Forbes endorsement, albeit with some worry about that spying episode. (Forbes)
• Lovingly detailed look at the H-P boardroom spying affair. (The New Yorker)

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting