Weekend Reading: Goodbye Microhoo!
Paul Kedrosky
05/04/08 - 02:16 PM EDT
Good Sunday, 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.
The markets have declared a moratorium on subprime and recession worrying. The just-completed month of April was the first up month for the markets since November, and we now have had three consecutive weeks of gains. This week the
Dow and the
S&P 500 were up 1.3% and 1.2%, respectively, while the
Nasdaq gained 2.2%.
Slightly weaker oil prices helped this week, as did an unexpected increase in oil inventories. While the
Fed didn't put a halt to rate cuts, as many people hoped, we did benefit from a number of corporate reports that came in stronger than expected, as well as a stronger first-quarter GDP report than had been forecast. There is an increasing feeling out there, rightly or wrongly, that the current downturn will be less deep than many had forecast, leaving the big question of how long it will persist.
Looking forward to next week, the big news will come Monday with the inevitable plunge in
Yahoo!'s(YHOO Quote) shares. Estimates vary, but it will likely fall back to the low $20s, at least, on news that
Microsoft(MSFT Quote) has decided to stop banging its head on the rock of Yahoo's refusal to deal on an acquisition. Microsoft stock will likely climb on Monday, and
Google(GOOG Quote) stock could do even better, given its role as spoiler here and how it will benefit from the news.
Turning to economic news, here are some things to watch on the week. We will see services, housing and productivity reports, as well as a Monday speech by Federal Reserve Chairman Ben Bernanke on mortgage delinquencies and foreclosures.
Turning to earnings, it will be another busy week. One of the most closely watched reports will be
Cisco's(CSCO Quote), and expectations run high for the networking company. That said, weak results last week from
Sun(JAVA Quote) should be making investors at least a little more nervous about the Cisco outlook.
Finally, here are some articles and papers worth reading:
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- Microsoft withdraws offer for Yahoo!. (Reuters)
- Guessing Yahoo!'s Monday share price. (The New York Times)
- Rush of Microsoft and Yahoo! talks preceded end. (Reuters)
- Warren Buffett hosts a "gloriously capitalist" weekend. (FT)
- Wall St. cuts perks with writedowns, layoffs. (Reuters)
- Future of lucrative cholesterol drugs murky. (Reuters)
- California water shortage worst in decades. (Los Angeles Times)
- Dollar reserve status is tale of fading glory. (Bloomberg)
- Barron's tips General Dynamics
(GD Quote) (Barron's)
- Citi analyst persists in bear case for commodities. (The Washington Post)
- DRAM rankings: Samsung seeks to bury competitors. (EE Times)
- China has a lot to be angry about -- mostly about itself. (The Economist)
- John Paulson's funds slid in April. (New York Post)
- Short-sale price tests and market quality. (Journal of Finance)
- Settlement delays in the money market. (New York Fed)
- Does the exchange rate really affect consumer spending? (SSRN)
