Innovation Update

Return to Article

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.

The major U.S. indices had their best week in four years. The S&P 500 gained 3.5%, and the Dow climbed 3.1%. The tech-heavy Nasdaq rose more or less equivalently, up 3.2% for the week. Most people "blamed" positive comments on future Fed rate cuts in this past week's FOMC statement. That's fair enough, but you might just as well as have blamed sunspots. After all, investors have been selling and have been nervous for the better part of a month, so it doesn't take much to turn things around in a fear rally, which is exactly what we had this past week.

Looking forward to next week, bulls will try to keep things going, but it may be a little tougher. Last week's positive Fed statement, as well as a lessening of concern about subprime mortgages, helped do the trick, but that particular fuel won't be available next week. Instead, we have new concerns about the subprime spiral, including the impact it could have on higher quality borrowers.

Turning to economic indicators, the Commerce Department plans to release February new home sales Monday. That will be followed Tuesday by the Conference Board's March consumer confidence index, which is expected to show a slight decline. Durable goods orders are scheduled for Wednesday and are expected to be somewhat weaker. Lastly, we have the final revision of fourth-quarter GDP on Thursday.

As for earnings, it will be a quiet week, although Tiffany(TIF Quote) and Family Dollar Stores(FDO Quote) are reporting.

Finally, here are some articles and papers worth reading:

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.

• Subprime troubles are now snaring people with better credit. (Bloomberg)
• Real estate market troubles have been limited to the regions with the least price appreciation. (Econbrowser)
• Research: Life after loss of analyst coverage. (Social Science Research Network)
• Research: Award-winning CEOs tend to subsequently underperform the market. (SSRN)
• Microsoft's(MSFT Quote) bad week: The company was victimized by identity thieves, and new data show a continuing search decline. (ComputerWorld and Comscore)
• Research: Housing markets are becoming more efficient. (NBER)
• Research: The myth of economic recovery -- declines not necessarily followed by offsetting advances. (Bank for International Settlements)
• Overregulation and the danger in scaring low-income consumers away from subprime mortages. (The Economist)
• Real estate speculator turns own foreclosures into a business. (iamfacingforeclosure.com)
• Millisecond trading works, except when when you want it to most, like in market crises. (Economist.com)
• Three major risks facing the market as we go into the second quarter. (Los Angeles Times)
• Accidents related to email/phone/entertainment gadgets could lead to major lawsuits. (The New York Times)
• Why West Texas Intermediate oil is the weakest pricing link. (This Week in Petroleum)
• Companies with natural gas resources want ever-larger stakes in the profits. (Time)
• Apple(AAPL Quote) has finally become an acceptable choice, even outside the cult of Mac. (The New York Times)
• The gloves have come off between Oracle(ORCL Quote) and SAP(SAP Quote) now that Oracle has accused its rival of spying. (CFO.com)
• Barron's picks RadioShack(RSH Quote) and CMGI(CMGI Quote) but pans housing and subprimes. (Barron's)