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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.

The major U.S. indices gained ground last week. The Dow Jones Industrial Average closed up 1.6%, the S&P 500 rose 1.7% and the Nasdaq added 2.1%. The chief cause? Lower-than-expected inflation numbers put to rest the previous week's inflation worries, and earnings have come in strong, especially on the nonconsumer side.

Looking forward to next week, things look set go higher. Companies are signaling that things look good in the second half of the year. What's more, earnings are likely to beat the current consensus of 4.6% year-over-year growth, largely on the back of business-to-business sales.

Turning to economic indicators, on Monday the National Association of Home Builders plans to release its housing market index, which is expected to give a reading similar to May's. On Tuesday the Commerce Department will release data on housing starts and building permits for May, with building permits expected to rise slightly. Lastly, on Thursday the Conference Board plans to release its leading economic indicators for May.

Turning to earnings, it will be another light week, but we will see numbers from Best Buy, Circuit City, FedEx and Morgan Stanley.

Finally, here are some articles, papers, and books worth reading:

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• Commodities still attracting big investors. (Reuters)
• Retailers and consumer companies desperately searching for growth. (Reuters)
• Ethanol-driven demand is being felt across the corn market. (The Washington Post)
• Telecom is back from the dead, courtesy of MySpace and YouTube. (BusinessWeek)
• Online sales are losing steam, according to a somewhat overheated piece. (The New York Times)
• India and China drugs pouring into U.S. receiving little scrutiny. (The Washington Post)
• eBay's anti-Google actions last week could embolden others. (New York Post)
• Anti-Apple hit piece. (New York Post)
• The bull market will continue because journalists don't think it will. (Forbes)
• The trouble with technical analysts. (Forbes)
• Time is running out for the carry trade. (Economist.com)
• Greenspan says, "Don't listen to me." (The Washington Post)
• Research: The rise and fall of U.S. inflation persistence. (FRB)
• Pre-IPO speculation and excitement growing around Facebook. (iGreed)
• BP has released its 2007 Statistical Review of World Energy. (BP)
• Research: Individual investor trading and stock returns. (Journal of Finance)
• Research: The FED model and expected stock returns. (SSRN)
• Short-term energy outlook sees price declines through early summer. (EIA)
• OxyContin and pain-drug vendors get bad press. (The New York Times Magazine)
• Barron's midyear outlook is mostly bullish on 2007. The publication pans online video. (Barron's)
• Vinegar and the "bubble" bubble in markets. (Bloomberg)
• Research: BIS quarterly review of markets. (BIS)

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