Innovation Update
Weekend Reading
Paul Kedrosky
04/22/07 - 01:52 PM EDT
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.
All the major U.S. indices were up last week. The Dow's 2.8% gain on the week put it at record levels and within 30 points of the 13,000 mark. Meanwhile, the S&P 500 was up 2.2%, and the Nasdaq rose 1.4% on the week. I remarked here last weekend that earnings surprises would likely take the market higher, but even with that expectation, these were big gains.
Looking forward to next week, there may be more earnings surprises, but it probably will be harder for the indices to tack on more big gains, given last week's strong performance. I wouldn't be surprised to see prices flatten or even come down a little. Then again, according to Reuters, 70 of the 100 companies reporting last week beat consensus estimates, and S&P 500 companies are now forecast to see earnings increase by 5.3% vs. a year ago. That compares with the 4.5% figure with which we entered last week.
Turning to economic indicators, on Tuesday we will see the consumer sentiment index from the Conference Board. The index fell somewhat last month, and economists are expecting a further decline. Also Tuesday, March existing-home sales data are due out, followed Wednesday by new-home sales. Lastly, on Friday we will see the preliminary first-quarter GDP estimate, which currently is forecast to come in at a 1.8% growth rate, down from 2.5% in the last quarter of 2006.
Turning to earnings, it'll be a busy week. Here are just some of the companies reporting: Anheuser-Busch(BUD Quote), Microsoft(MSFT Quote), DuPont(DD Quote), Boeing(BA Quote), Exxon Mobil(XOM Quote) and Chevron(CVX Quote).
Finally, here are some articles and papers worth reading:
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- Lower taxes were a major unheralded factor in Google's(GOOG Quote) earnings surprise. (Reuters)
- We're entering what is historically the slow season for stocks. (The New York Times)
- AMD(AMD Quote) is within two quarters of running out of cash. (EE Times)
- Hedge fund industry award nominees led by Citadel and Fortress(FIG Quote). (Alternative Investment News)
- Good list of hedge fund myths and facts. (Crestmont Research)
- Google's new transferable stock option program is going to leak news. (iGreed)
- Research: Why money stays in poor-perfoming mutual funds. (NBER)
- Google is breeding Googlephobia with its DoubleClick acquisition. (Telegraph)
- Consumer groups ask FTC to probe Google/DoubleClick deal. (AdAge.com)
- The BCE (BCE:Toronto) buyout is transforming the Toronto Stock Exchange. (Globe and Mail)
- Credit derivates are a good thing -- in moderation -- but they have yet to face a real test. (The Economist)
- Equity arbitrage and LBOs will drive the market higher. (Forbes columnist Ken Fisher)
- The BlackBerry network is overcentralized and therefore prone to major failures. (CNET)
- Wal-Mart's(WMT Quote) midlife crisis. (BusinessWeek)
- Subprime assault on southern California. (FT)
- Barron's picks Waste Management(WMI Quote) and Joy Global(JOYG Quote), and pans Warren Buffett and tech stocks heading into the summer. (Barron's)
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