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Weekend Reading: Oil Bomb

Paul Kedrosky

Welcome to a Memorial Day edition of Weekend Reading. First, a look back at the week that just finished, then a look forward to the week ahead, and, last, a summary of articles and papers worth reading.

It was the worst week on the major U.S. markets in three months. Driven chiefly by ever-higher oil prices, the Dow and the S&P 500 lost 3.9% and 3.5%, respectively, and the Nasdaq fell 3.4%.

Looking forward to next week, there will be understandable attempts to take things higher on a technical rebound. At the same time, however, an awful lot of what happens next hinges on one thing: oil prices. At these prices, damage is being done across the economy, whatever brave face consumers and companies put on it, and the consequences will be felt in the coming quarters. At least a few points are going to come off earnings growth, and that has yet to be adequately factored into analyst and investor models.

Turning to economic indicators, the holiday-shortened week ahead will bring a preliminary first-quarter GDP estimate (Thursday), durables goods orders (Wednesday), new-home sales (Tuesday) and personal income and spending (Friday).

As for earnings, a spate of Canadian banks plan to report, plus Dollar Tree(DLTR Quote - Cramer on DLTR - Stock Picks) and Dell(DELL Quote - Cramer on DELL - Stock Picks).

Finally, here are some articles and papers worth reading:

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• NYSE trading falls to 7-year low, even though overall U.S. volume is rising. (Bloomberg)
• Following the money: I-bankers move to the Middle East. (IDD)
• SocGen finds more than 1,000 rogue trades in Kerviel probe. (Dow Jones)
• Barron's picks Mohawk Industries(MHK Quote - Cramer on MHK - Stock Picks), pans FMC Technologies(FTI Quote - Cramer on FTI - Stock Picks). (Barron's)
• Betfair battles "the fix" in sports betting. (The New York Times)
• What Popcorn Prices Mean for Movies. (Advertising Age)
• As Global Wealth Spreads, the IMF Recedes. (The Washington Post)
• Investors will return from holiday with same fears. (Los Angeles Times)
• Stocks soaring in raw material-rich Brazil. (San Francisco Chronicle)
• Dan Kahneman on how thinking costs you money. (The Washington Post)
• Canny and ruthless, Icahn lives to win. (SiliconValley.com)
• Who Is John McCain? (The New York Review of Books)
• Sony(SNE Quote - Cramer on SNE - Stock Picks) says develops cost-efficient solar cells. (Reuters)
• Tech sector sees more deals despite tough financing. (Reuters)
• California Home Prices Drop 32% Amid Foreclosures, Realtors Say. (Bloomberg)
• Venezuela: Land of 12-Cent Gas. (BusinessWeek)
• Global housing markets' structural cracks. (The Economist)
• Energy Speculators Draw the Heat. (The New York Times)
• China's Growing Economic Activity in Africa. (NBER)

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