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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 had their best week since April of this year, with all three posting marked gains. The Dow and the S&P 500 both ended the week up 2.3%, while the Nasdaq Composite closed up an impressive 2.9%.

Next week is a tougher one than usual to call. Although investors seemingly feel that that the Fed discount-rate cut is doing its job, we are headed into a short week for many investors, and one that is likely to see low trading volumes and lots of volatility. On the one hand, economic conditions outside of housing and retail continue to look solid. On the other, everyone feels that more bad credit news will come eventually.

Turning to economic indicators, it will be a busy week. The S&P/Case-Shiller Home Price Index is due for release on Tuesday, as are the Conference Board's August consumer confidence index and weekly retail sales data. Both consumer confidence and chain-store sales are expected to decline. Also scheduled for Tuesday are the minutes from the Fed's Aug. 7 policy meeting. Wednesday will bring weekly data on mortgage applications. On Thursday we are due to receive the government's preliminary report on second-quarter GDP. Finally, on Friday, we will see July figures for personal income and spending. Busy stuff.

As for earnings, companies reporting next week include H&R Block and Dell(DELL Quote).

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

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• The Fed discount window is open, and no one's coming. (Reuters)
• Eye-opening interview with Washington Mutual CEO Kerry Killinger. (San Francisco Chronicle)
• Muni bond funds hit by perfect storm. (MarketWatch)
• Chinese banks have just begun disclosing their subprime credit exposure. (The Washington Post)
• Great Michael Lewis read on quants and catastrophe finance. (The New York Times)
• Brace yourselves for the insolvency crunch. (Telegraph)
• Structured securities have dynamic credit quality. (Bloomberg's Caroline Baum)
• Asset prices should be high on the agenda for this week's Jackson Hole economic confab. (Bloomberg)
• Four ways for central banks to avert a crisis. (Bloomberg)
• Fastest-growing segment of the TV-watching population is aged 59-65. (AdAge)
• Chinese pollution has reached the point where fixing it may hold back economic growth. (The New York Times)
• Apple's real weapon isn't iPods or iPhones, it's computers. (Fortune)
• There has been a risk wake-up call in the major markets. (Fortune)
• Subprime-affected companies are editing their Wikipedia entries. (iGreed)
• The Fed is bending its own rules to accomodate troubles at the major banks. (Fortune)
• Useful map of locations of U.S. energy infrastructure. (EIA)
• Another report of a Dell laptop bursting into flames. (Consumer Affairs)
• Japanese housewife hid $3 million in foreign exchange gains. (Reuters)
• Pimco's Bill Gross calls for Bush Administration to bail out homeowners. (PIMCO)
• Banker "bid 'em up" Bruce Wasserstein says to expect more credit embarassment. (BusinessWeek)
• Leverage and subprime woes at hedge funds. (BusinessWeek)
• Dubai's sovereign fund is getting out of boring stuff like Treasuries ... Can Pebble Beach not be next? (New York Post)
• Rumor that Google to launch "gphone" in two weeks. (MercExtra)
• Medtronic's trouble with overpromising and underdelivering. (The New York Times)
• Fascinating stuff on hedge fund contagion during market meltdowns. (The New York Times)
• The return of vaccines. (The New York Times)
• Inside the Countrywide Financial lending spree: lax standards and arrogance. (The New York Times)
• Stocks to watch for clean-energy investors. (The Washington Post)
• Liquidity crunch hits non-U.S. treasury bill markets. (Globe and Mail)
• Barron's picks Gold Bond and Comcast, and pushes a Qualcomm divestiture. (Barron's)
• Research: Information sales and insider trading. (Journal of Finance)
• Research: What determines the level of short-selling activity. (SSRN)
• Research: The causes and consequences of U.S. household indebtedness. (Federal Reserve Board)

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