Market Features
Weekend Reading
Paul Kedrosky
01/27/08 - 04:05 PM EST
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Welcome to Weekend Reading. First, a look back at the week that just finished, and then a look forward to the week ahead. Finally, I'll point to some articles and papers worth reading.
It wasn't as bad as it could have been. Despite all the bouncing about early in the week, U.S. markets didn't do too badly by the time the week was over. As a matter of fact, two of the three major indices were in the green for the week, with the Dow Jones Industrial Average gaining 0.9% and the Standard & Poor's 500 up 0.4%. The Nasdaq Composite lost 0.6%.
It was a wild ride, though. When it started, it looked like it might be a week of major losses, perhaps the biggest in years. But the Federal Reserve rode in and fired off a surprise 75-basis-point rate cut, which stopped the market in its tracks. Although the cut set the tone for a churning week, many stocks found a way to move higher.
Going forward there is a reasonable chance -- rogue traders aside -- that we could see a bias higher next week. There is a general sense that we're putting in a market bottom, even if the U.S. economy could
still weaken. Also, the Federal Open Market Committee is meeting this week, and many investors are expecting a 50-basis-point rate cut. That could provide support to the market, even if it's already largely discounted in.
Turning to economic news, the big event of the week is the aforementioned FOMC meeting, scheduled for Wednesday. Investors will focus on whatever commentary accompanies the expected rate cut. Given some of the chatter this week that a rogue trader at French bank Société Générale was to blame for some of the market declines that led to last week's intermeeting cut, it'll be interesting to see how closely Bernanke hews to the "we don't care about the stock market" line.
As for earnings news, it will be an extremely busy week. Among the companies planning to report are American ExpressAXP, McDonald'sMCD, BoeingBA, Procter &
GamblePG, MerckMRK and Pulte HomesPHM.
Finally, here are some articles and papers worth reading:
- Barron's picks Helmerich & PayneHP, and pans SystemaxSYX and Chinese IPOs. (Barron's)
- French reaction to the rogue Société Générale trader is largely puzzlement (Los Angeles Times)
- Inside Southwest Florida's real estate market, where everything has stopped dead. (Boston Globe)
- Politicians continue to talk about an economy that doesn't exist. (The New York Times)
- Productivity growth going forward looks like a return to trend, but lower than the last decade. (FRB)
- Arbitrage in housing markets. (NBER)
- Silicon Valley is off the political radar: that's got to be good. (EE Times)
- How Tiger Woods makes everyone else on the course play worse. (University of California, Berkeley)
- Polls show the backlash against free trade is growing. (CNN)
- Regulator opposes lifting mortgage caps. (CNNMoney)
- Financial crisis to hit 20,000 London jobs. (Reuters)
- Fascinating look at long-run real estate prices via Dutch data. (Reuters)
- Société Générale just won equity derivatives house of the year. (Risk)
- Home prices sank in 2007, and buyers hid. (The New York Times)
- Traders are mostly shocked at SocGen trader Kerviel's apparent lack of profit motive. (Financial Times)
- George Soros tells the World Economic Forum that the U.S. economy is doomed. (The Sunday Times of London)
- AppleAAPL iPhones are piling up at AT&TT stores. (News.com)
- Nike'sNKE plan to become the biggest global brand. (Forbes)
- Interview with nonagenarian super-investor Walter Schloss. (Forbes)
- America's 25 fastest-growing tech companies. (Forbes)
- The advertising market tends to tank in tough times. (The Economist)
- Tom Brady and efficient capital markets. (CFO.com)
- Was Elevation Partners' investment in PalmPALM among the worst in recent memory? (Tech Confidential)
- Three different voices about U.S. outlook. (San Francisco Chronicle)
- Wildly bearish stuff from Royal Dutch ShellRDS-B on future oil supplies. (Reuters)
- How Canada's tar sands rose to prominence, and what their future holds. (Globe and Mail)
- In troubled times, why don't mutual fund investors sell? (The Washington Post)
- Robert Shiller on needed regulatory reforms in banking and brokerage. (The New York Times)
- The future of meat consumption and its impact on agricultural markets. (The New York Times)
- Risk preference shows -- income and age aside -- remarkable stability across people's lives. (FRB)
- Is NAND market ready to crash? (EE Times)
- The decline of U.S. economic dominance, and what it means. (The New York Times)
- How the corporate bond market processes information. (SSRN)
- Leaders and followers in equity research. (SSRN)
- SocGen had more than $70 billion of exposure from Kerviel's trades. (New York Post)
- Alan Greenspan says no slump yet, but severe downturn entirely possible. (The Sunday Times of London)
- A plethora of European hedge funds are in crisis and halting redemptions. (The Sunday Times of London)
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