Linkfest: The Week Ahead

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Yesterday we looked at the week that was. Today, we  preview the week that might be.

With the third quarter now over, investors will be looking for any signs as to how the fourth quarter will unfold. We are in the middle of the earnings warning period, so specific stocks -- as opposed to the entire market -- can get volatile. Pay close attention to what we hear from retailers (mediocre), finance firms (lots of unanswered questions) and technology (surprisingly strong numbers).

This week will also see a smattering of earnings reports: Palm(PALM Quote), Research in Motion(RIMM Quote), Walgreen(WAG Quote), Marriott(MAR Quote) and Pepsi Bottling Group(PBC Quote). Across the pond, my very favorite necktie designer, Ted Baker, reports Thursday.

In terms of economic data, we are backloaded this week. The mack daddy of data points, nonfarm payrolls, will be released Friday. (The consensus is for 115,000 new jobs.) It should shed light on whether August's negative report was merely an aberration, or a sign of things to come. Other employment-related data this week include the ADP employment report, along with the Challenger layoffs report Wednesday. On Thursday, we'll get weekly jobless claims, as well as the Monster employment index.

But it's not just a week of employment data: On Monday, the Institute for Supply Management releases its manufacturing index. (The institute publishes its service-sector survey Wednesday.) Tuesday brings same-store sales and pending home sales. Central bankers overseas weigh in on Thursday, when the BOE and the ECB both announce any rate changes. Factory orders are also released on Thursday.

The other key factor investors should pay attention to is the credit crunch, and whether it's eased up very much. That in turn could impact share buybacks and private equity LBOs.

It is also another week of Fed-speak, with speeches or Q&A from Dallas Federal Reserve Bank President Richard Fisher (twice) and Federal Reserve Governors Frederic Mishkin, Donald Kohn and Kevin Warsh (all FOMC voting members) throughout the week.

Where to begin this week: The Dow within 1% of its all-time highs? The dollar near its all-time lows? (Don't we have a strong dollar policy?) Retail Sales? Bonds? Housing?

Let's get it on!

INVESTING & TRADING

• Rate Cuts: Cheer or Jeer? "The idea that interest-rate cuts are good for stocks is viewed as such an absolute truth on Wall Street that it isn't even a matter of debate. But the reality is a bit more complicated." (The Wall Street Journal)

• Goldman Sachs tiptoeing into the bear camp? "Goldman Sachs has abandoned its ultra-bullish view of the world economy, warning of a likely recession in Japan and mounting risks that US property slump could spread to parts of Europe." (Telegraph)    

• The Mind and the Moment Consider this mental state: "Acceptance of what has happened combined with confidence about what will happen." That's the fascinating lesson on "conserving concentration" from tennis great Roger Federer that is very applicable to investors and traders. (Tennis World)

• U.S. dollar slide: The Financial Times asks: "Can sentiment get any worse? As the dollar flirts with all-time lows on a trade-weighted basis, the smell of approaching capitulation is in the air. The bears have plenty of fodder. A need to rebalance the huge current account deficit has provided a solid long-term case for dollar weakness. The prop of higher-yielding dollars has been eroded by rising interest rates abroad and now pummelled by the Federal Reserve's half-point cut."

• How often do you see me post anything nice about Mister Softee? Microsoft(MSFT Quote) gets its game on: "Microsoft scored a huge victory with the release of its Halo 3 video game. The final installment of Microsoft's wildly popular Xbox 360 first-person shooter trilogy attracted casual and hard-core gamers to midnight release parties across the country and set one-day sales records." (CNET) 

• An Early Look At Tax Brackets For Next Year: "Most people will get a modest dose of tax relief next year. But high-income taxpayers are likely to receive a bigger portion." (The Wall Street Journal)

• Markets never spot the black swan.  (The Guardian)

• Ethanol's Boom Stalling as Glut Depresses Price: "The ethanol boom of recent years -- which spurred a frenzy of distillery construction, record corn prices, rising food prices and hopes of a new future for rural America -- may be fading." (The New York Times)

• Morgan Stanley's new man in Asia, Stephen Roach, discusses currencies in The New York Times: "Currencies are first and foremost relative prices -- in essence, they are measures of the intrinsic value of one economy versus another. On that basis, the world has had no compunction in writing down the value of the United States over the past several years. The dollar, relative to the currencies of most of America's trading partners, is off about 20 percent from its early 2002 peak. Recently it has hit new lows against the euro and a high-flying Canadian currency, likely a harbinger of more weakness to come..." Save the Day.

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ECONOMY

The wall of worry continues to build:

• How Economy Could Survive Oil At $100 a Barrel: "The world economy has managed, with some indigestion, to swallow the rise of oil prices past $80 a barrel. How well could it survive $100 a barrel? The answer is quite well -- so long as several conditions still hold true." (The Wall Street Journal)

• A Handy Translation Book: When the Fed says X, they really mean Y.

• New Concern: Business Spending: "Orders for durable goods such as computers and machinery tumbled in August, raising concerns that business spending may slow. The Commerce Department said orders for durable goods, which are items designed to last three years or more, fell 4.9% last month. Analysts had expected orders to decline, considering July's especially strong 6.1% gain." (The Wall Street Journal)

• Ahead of the (yield) curve: "Little noticed in the wake of the Federal Reserve's rate cuts one week ago is how much steeper the yield curve has become. That usually would be taken to mean that the risk of a recession has lessened. I think it is significant that it hasn't received more attention."  (MarketWatch)

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HOUSING

• Continuation of Negative Annual Returns in Housing.   

• Foreclosures drag down home sales: "The explosion in home foreclosures and a tightening in mortgage lending dragged down real estate prices in Massachusetts in August, a real estate research and publishing firm reported yesterday." (Boston Globe)

• Wheeee! New Homes Sales, Prices in Freefall.  See also: Why Investors May Want To Shun Builders. (The Wall Street Journal)

• Freddie Mac chief warns of recession: "The U.S. economy faces a 40 to 45 per cent risk of recession induced by the housing market downturn, the chief executive of Freddie Mac warned on Thursday as data showed sales of new homes hit a seven-year low in August." (FT)

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TECHNOLOGY & SCIENCE

• The Guardian gathers in one place 15 great interviews of the 20th Century, including Richard Nixon, John Lennon, Marlon Brando, F. Scott Fitzgerald, Margaret Thatcher, Malcolm X and Adolf Hitler.

• Openmoko: Worthy open source iPhone competitor? Economist.com and eWeek have all the details.

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MUSIC BOOKS MOVIES TV FUN!

• The new Springsteen disc, Magic, gets released this week. I like the first single, Radio Nowhere. The New York Times, via a huge Arts & Leisure article, likes it a lot: "There is a brightness of sound and a lightness of touch that are not quite like anything else Mr. Springsteen has done recently." Thirty-second audio clips of all songs are included. Also of interest: Who'll be the next Springsteen?

If anyone saw Blade Runner: Final Cut, please tell me what you thought!

Got a comment, suggestion, link idea? Or do you just have something on your mind? The Linkfest loves to get email! If you've got something to say, then by all means, please do.

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