Market Features
Weekend Reading: Getting Used to 'Worse Than Expected'
Paul Kedrosky
03/02/08 - 02:12 PM EST
Good Sunday morning, and welcome to another edition of Weekend Reading. First a look back at the week that just finished, then a look forward to the week ahead, and lastly, some articles and
papers worth reading.
Well, at least the week started off OK. The major U.S. indices gained more than 2% in the first three trading days of the week, largely on the back of less-than-awful economic news, some decent earnings results and chatter than mortgage insurers might be past the worst. All that happy-happy stuff ended on Thursday and Friday, however, when the markets sold off with a vengeance. The Dow
ended the week down 0.9%, while the S&P 500 and Nasdaq Composite
were off 1.7% and 1.4%, respectively.
Why the late-week collapse? There was a host of things: ever-growing recession fears, sparked by weak consumer spending and consumer sentiment figures; a horrible week for the U.S. dollar; and record-high oil prices. All of these combined at the end of the week to renew the sense that things were still worse than most people expected. And in an expectations game, being "worse than expected" is what mattered, so down the market went.
Next week will likely not be significantly better overall. While we may see some buying interest on Monday, there is a spate of economic news next week, little of which is likely to be better
than expected. There is a possibility that strong earnings could save things -- and that possibility should not be discounted -- but the market seems back in the mood to find fault, so the bias next week is likely
lower.
Turning to economic indicators, on Monday we will see Institute for Supply Management's February manufacturing survey, followed midweek by ISM's service-sector report. Pending home sales figures are due Thursday, as are data on weekly jobless claims. But the biggie will come Friday in the form of the federal government's employment report for February.
As for earnings, companies worth watching include Staples(SPLS Quote - Cramer on SPLS - Stock Picks), H&R Block(HRB Quote - Cramer on HRB - Stock Picks) and Costco(COST Quote - Cramer on COST - Stock Picks). Also of note: Wal-Mart(WMT Quote - Cramer on WMT - Stock Picks) is expected to report its February sales results Thursday.
Finally, here are some articles and papers worth reading:
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- Chavez warns of war if Colombia strikes Venezuela. (Reuters)
- The Nasdaq is getting eager about special purpose acquisition companies. (IDD)
- How the global banking system was brought back from the brink. (Bloomberg)
- Barron's picks debt-laden stocks that could rebound and Energizer(ENR Quote - Cramer on ENR - Stock Picks). (Barron's)
- Measuring the relative value of U.S. dollars. (MeasuringWorth)
- Email scandal over Microsoft's(MSFT Quote - Cramer on MSFT - Stock Picks) 'botched' dealings with Intel(INTC Quote - Cramer on INTC - Stock Picks) and Hewlett-Packard(HPQ Quote - Cramer on HPQ - Stock Picks). (SiliconValley.com)
- The New York Times Company(NYT Quote - Cramer on NYT - Stock Picks) is under fire for slow switch to online. (Times of London)
- The New York Times deathwatch, courtesy of Marc Andreessen. (Fortune)
- Why nobody in Washington wants to say 'recession.' (Slate)
- Peloton's crash fires fears of more fund collapses in the U.K. (Times of London)
- Why earnings forecasts of firms experiencing sales declines are so bad. (Journal of Investing)
- Compression and Expansion of the Market P-E Ratio: The Fed Model Explained. (Journal of Investing)
- 130/30 has become the new long-only. (SSRN)
- Why financially distressed stocks have delivered anomalously low returns. (Journal of Finance)
- Dissecting market anomalies. (SSRN)
- Gold and the new global gold rush. (Globe and Mail)
- A new generation of personal finance sites has emerged. (The Washington Post)
- Would Yahoo!(YHOO Quote - Cramer on YHOO - Stock Picks) investors shudder at bigger Microsoft bid? (The New York Times)
- Controversy over Google's(GOOG Quote - Cramer on GOOG - Stock Picks) maybe, or maybe not, declining growth rate. (The New York Times)
- The current economy is a rerun, but no one is quite sure of what era. (The New York Times)
- How the housing bubble stayed under the radar. (The New York Times)
- January chip sales fell. (EE Times.com)
- Nifty look at whose trades you should pay attention to. (SSRN)
- How accurate is the January barometer? (SSRN)
- Private equity is somehow burgeoning again. (New York Post)
- Behind-the-scenes look at how Pepsico(PEP Quote - Cramer on PEP - Stock Picks) has changed its fortunes and strategy (Fortune)
- Things are worse for consumers than the data show. (The New York Times)
- Vacant homes in U.S. climb to highest level since 1970s. (Bloomberg)
- Visualizing Warren Buffett's 2008 letter to shareholders. (iGreed)
- Must-read paper on the origins of the mortgage market meltdown. (Brandeis)
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