Weekend Linkfest

Heckuva week, Bernie!

The Fed held interest rates at 5.25%, igniting a powerful rally. Economic growth looked better, and while energy prices rose 6.5%, the Fed said inflation remained contained.

The S&P 500 had its best week in six months, gaining 1.8% (for a 6-year high). The Dow Industrials added 1.3%, building on its January gains. After two consecutive weeks in the red, the Nasdaq tacked on 1.7%.

Barron's "Trader" column notes that "Despite the broad surge, the lagging performance of key market leaders is a worrisome sign that bears watching. Financial stocks foundered in January as improving economic data pushes out expectations of a rate cut. And while the major indexes ended the month at their highs, the Nasdaq's peak came mid-January and technology stocks' momentum has since flagged."

It was a busy week of earnings and economic reports. Here's our clickable review of what just was:

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INVESTING & TRADING

• Up month, up year? "According to the Stock Trader's Almanac, how the S&P 500 does in January tends to correlate with how the market does for the full year." (See Chart.) "Since 1950, the barometer has been right 91 percent of the time, according to the Almanac, or 75 percent of the time when you factor out years that ended essentially flat." (CNN/Money)

• Those amazing Transports vs. The mysterious trouble in the trucking industry. (MarketWatch/Slate)

• Last year around this time, Gary Douglas Smith speculated on the 20 reasons U.S. stocks would rise a total of 15% for the year. Fast forward 12 months, and he has 32 Reasons Stocks Will Jump This Year.

• Earnings Season Progressing Nicely, with beats and misses being pretty innocuous. Guidance is worse than the past four quarters, however.

But the big earnings news is:

• S&P's Corporate Growth Streak Snapped: Big U.S. Companies Not Seen Continuing Double-Digit Growth Pattern. "For America's top 500 companies, the absence of extraordinary earnings news this past week pretty much guarantees 18 consecutive quarters of double-digit profit are over. Wall Street analysts say fourth-quarter results are running just about on par with historical averages. As of Jan. 31, with 57 percent of S&P components reporting, companies have posted profit growth that has averaged 8.1 percent, the rating agency said." (AP/Yahoo! Finance)

• Naked and Confused: How a tiny software outfit fell victim to an illegal but unrestrained practice known as naked short-selling. (Forbes)

• Sell Yuan, Buy Rupee? A New Trade Comes to Asia.

• It's been a very long time -- 930 days, to be exact -- since the Dow Industrials suffered a 2% one day decline. Not only has the S&P 500 gone almost four years without a 2% down day, it has been seven months since it has corrected 2% at all! This is the second-longest such period in 53 years.

• So what's better, buying 52 week highs or buying 52 week lows? (TheStreet.com TV)

• Loss at Goldman Hedge Fund Racks Duo at Secretive Global Alpha: "In 2006, Global Alpha went wrong when just about everything else at Goldman Sachs went right. After a roller-coaster ride that included a 10 percent August plunge, Global Alpha ended the year down 6 percent, according to an investor in the fund. The loss, the first since 1999, came in a year when Goldman earned $9.54 billion, the most in Wall Street history." (Bloomberg)

• The 10-year yield continues to creep upwards.

• "Investors often scrutinize insider stock sales for what they suggest about a company's prospects. Now researchers say there's evidence that corporations could be in for trouble when top executives cash out quickly": Research firm hunts for clues in insider sales. (Reuters)

• Bull and Bear Served at Fund Manager Dinner: "In the bull corner, as usual, was Jeremy Siegel -- professor at University of Pennsylvania's Wharton School of Business, and author of the popular investment tome Stocks for the Long Run. In the bear corner, also as usual, was Jeremy Grantham, veteran chairman of Boston fund firm GMO." (TheStreet.com)

• Do global bonds still offer investors diversification benefits, despite the growing integration of the world's major bond markets? (Pimco)

• Bill Gross, Pimco's bond guru, observes, "Bond, stock, and real estate trends then, have recently been increasingly at the mercy of relatively price insensitive and levered financial flows as opposed to historical models of value or the growth of the real economy itself." 100 Bottles of Beer on the Wall.

• Is the Chinese stock market bubble partly due to the country's fixed exchange rate regime? (Nouriel Roubini's Blog)

• The world according to Richard Russell: U.S., Shanghai stock markets worry veteran gold bug. (MarketWatch)

• Is the world pricing risk appropriately? No, says says Steven Rattner, co-founder of buyout firm Quadrangle Group. Investors aren't being paid enough for the risks they're taking as the premiums they receive for holding high-yield, high-risk debt decline, he says in Quadrangle's Rattner Warns Debt Investors on Risks. (Bloomberg)

• Top Finance Blogs. (I am not sure what the methodology was, though.)

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ECONOMY

Wall of Worry? What Wall of Worry? :

• NFP Update: weak January, but strong upward revisions to December and November.

• 'Goldilocks' Economy: Can It Last? "Inflation worries eased, as the Federal Reserve's preferred inflation gauge rose at an annual rate of only 2.1% in the quarter. The central bank responded by leaving interest rates unchanged, helping to drive the stock market to record highs. Meanwhile, unemployment edged up slightly, to 4.6% in January from 4.5%, easing worries that the economy is growing too fast. The news seemed to confirm the views of many analysts who believe the U.S. economy has entered a 'Goldilocks' phase -- not so hot that it causes inflation but not so cold that it spurs a serious economic slowdown." (free in The Wall Street Journal)

• This is kind of old news -- Jim Altucher and I debated the issue last year -- but Americans' negative savings rate is generating headlines again, after the Commerce Department reported that 2006's rate was the worst in 73 years. Savings Tumble Poses Risk to Boomers.

• Not just savings rate, but cash: "For all the bragging about the $6 trillion in cash households have sitting on their balance sheets, relative to household debt, this cash cushion is at a record low!" Spendthrift Nation (Barron's) (If you don't have a Barron's subscription, go to: Household Cash versus Debt.)

• I agree with Jim Cramer that the strength in the economy is "vastly overstated," but his prediction that the Fed will cut by May is a tough one to swallow. The fed fund futures data disagree. I was very surprised to hear him state the Trannies are running due to collusion amongst the rails and airlines over prices, and that U.S. antitrust regulators have become toothless tigers.

• Way Cool 3D globe depicting real time global economic activity.

• THE VALLEY RE-EMERGES: "Silicon Valley is back to creating new jobs and delivering fatter paychecks, a new report shows. The technology hub has 'rebooted,' putting the post-crash doldrums in the past, according to the latest Silicon Valley Index, an annual economic assessment by Joint Venture: Silicon Valley Network, an alliance of business and community institutions." (Mercury News)

• Taking Apart the Tainted GDP Data: The usually bullish Tony Crescenzi writes: "I don't mean to discredit the fourth-quarter gain completely, and I have been upbeat about growth, but the reported gain must be watered down to some degree." (My own take is here: Taking Apart Robust GDP Data.)

• Davos Is for Wimps: Bloomberg's Michael Lewis writes: "It's become almost obligatory for the world's most important economic people, at the beginning of each year, to travel joylessly to the base of a Swiss ski slope and worry. And to worry not privately, with dignity, but publicly, to anyone who will listen."

• After housing, manufacturing is the weakest sector of the economy: ISM Manufacturing Index vs. U.S. Gross Domestic Product.

• What's a penny (or a nickel) really worth?

• A tale of two cities?

U.K. January retail sales rise fastest in 2 years and U.K. January Factory Expansion Unexpectedly Quickens. (Reuters and Bloomberg)

But, European Retail Sales Dropped in January, PMI Shows. "European retail sales dropped for the first time in 10 months in January as spending in Germany slumped, adding to signs economic growth is slowing, the Bloomberg purchasing managers index showed." (Bloomberg)

• Morgan Stanley's Stephen Roach on Protectionist Threats: Then and Now.

• Animated Dynamic Yield Curve Chart: This chart shows the relationship between interest rates and stocks over time. The black line is the Yield Curve. The fading "trails" behind the black line show how the yield curve developed over the preceding days.

• Europe faces labor shortages as population ages: "On a continent accustomed to headlines about chronically high unemployment and fearful of immigrants, European politicians face an unusual task: finding workers for their companies." (International Herald Tribune)

• Via Lloyd's of London comes this fascinating Political and Economic Risk map. Be sure to zoom in on the Supply Chain Disruption risks, lower left. (PDF)

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FEDERAL RESERVE

The Fed sparked a rally this week, and plenty of commentary:

• Bernanke Marks Anniversary With Faster Growth, Slower Inflation. "Ben S. Bernanke starts his second year as Federal Reserve chairman with a strong hand of moderating inflation and accelerating growth. Government reports yesterday showed the economic expansion picked up last quarter with stable inflation, validating his decision six months ago to suspend interest-rate increases. The pause, a tough call because it came as housing was falling into the worst slump in 16 years and oil prices hovered near a record, has boosted Bernanke's stature and the Fed's credibility." (Bloomberg)

• Cut Rates? Stay the course? Tighten? Some investors think it doesn't matter, as this is The Best of all Possible Worlds!

• What happens If Fed Funds Rate "Fails" To Fall: "Central bankers abhor (1) the risk of getting whipsawed, prematurely changing policy on noise in the data flow and then having to quickly reverse in the opposite direction, and (2) being accused of targeting asset prices." (Pimco's Paul McCulley)

• Fed policymakers also retained their bias toward tightening credit as needed to reduce inflation. Discuss FOMC Statement and Policy (Bloomberg video)

• Bernanke's Puzzle: Job Market Won't Slow With Economy. "Call it the Federal Reserve's new conundrum: If the U.S. economy has slowed as much as some data suggest, why is the labor market still so strong? Chairman Ben S. Bernanke and his colleagues are debating the significance of an unemployment rate that's near a five-year low and 2006 job growth that's almost as strong as the prior year's. Either the labor market is lagging behind the slowdown by a few months, or the economy is stronger than official numbers suggest." (Bloomberg)

• "It was only two months ago that the futures market was pricing in better than 50-50 odds of a March rate cut by the Federal Reserve. The probabilities have since been pared to near zero." Getting the Fed to Ease Rates (David Rosenberg, Merrill Lynch North American Economist)

• The Chicago Fed applies statistical and economic analysis to forecast this year's Superbowl. (no, really!)

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HOUSING

This remains a dangerous hot spot.

• Foreclosures surge 42 percent in 2006: One out of every 92 households filed for foreclosure in 2006, suggesting that many homeowners are overextended in mortgage debt, group says. (Reuters)

• Number of vacant homes for sale surges 34%. "A year ago, 1.57 million homes were vacant and awaiting a sale. The vacancy rate for owned units jumped to a record 2.7% from 2.0% a year earlier. From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%." (MarketWatch)

• Housing Threatened by Defaults in Sub-Prime Mortgage Market: "Sub-prime mortgages, home loans with rates at least 2 or 3 percentage points above the safest, so-called prime loans, are given to people with poor or limited credit histories, or high debt burdens relative to their incomes. Such loans made up about a fifth of all new mortgages last year, according to the Mortgage Bankers Association in Washington." (Bloomberg)

• And when they go to refi, they have problems: Subprime borrowers facing tougher qualifications for mortgages.

• Across the pond, the U.K. housing market remains on fire: Mad London House Prices? We've Seen Nothing Yet.

• The New York Times laments, Alas, the Best Time to Buy a House Was 35 Years Ago. But that's true about nearly every asset class...

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SENTIMENT/PSYCHOLOGY

• The Two Biggest Mistakes of the Individual Investor.

• We're sorry this is late; we really meant to post it sooner: A University of Calgary professor in the Haskayne School of Business has recently published his magnum opus on the subject of procrastination - and it's only taken him 10 years.

• Investors consistently overpay for stocks in periods when profit margins are high.

• Our psychology word of the week: Miswanting.

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WAR/MEDIA/POLITICS/ENERGY

• Meanwhile, Ethanol Imports Are Rising: "Even as the U.S. looks to ethanol as a way to wean itself off foreign petroleum supplies, imports of the biofuel are soaring." (free WSJ)

• History of the Mid-East via Maps of War.

• Bartiromo Innuendo: What exactly is The Wall Street Journal trying to say?

• Speaking of which: Among print publications, The Wall Street Journal seems to have done the best job technologically with its video offerings.

• Libby Trial Puts Reporters' Recall To a Severe Test: "Special Prosecutor Patrick Fitzgerald is calling several prominent reporters to help bolster the government's case in the perjury trial of Lewis 'Scooter' Libby, Vice President Cheney's former chief of staff. But the journalists are likely to find themselves the subject of unflattering scrutiny as defense attorneys highlight imprecise and inconsistent recollections and note-taking." (free WSJ)

• 9-11 Panel Members Say Bush's Intelligence Overhaul a 'Failure.' "The Bush administration has failed to carry out the 9-11 Commission's recommendations aimed at improving the U.S. intelligence network, panel members said. The nation's 16 spy agencies are still slow to share information and there's no evidence that it's easier to move money and personnel among the agencies, members of the 9-11 Commission say. The most visible accomplishment of the current director of national intelligence, John Negroponte, has been to amass a staff of more than 1,300, they say." (Bloomberg)

Which leads to...

• What causes the press to turn on a president? When lap dogs become attack dogs: UCLA study isolates triggers for DC press.

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TECHNOLOGY & SCIENCE

• How to Protect Your Private Information. (The Wall Street Journal) Related: Tired of Junk email? You need a temporary inbox.

• iConcertCal is a free iTunes plug-in that monitors your music library and generates a personalized calendar of upcoming concerts in your city. How cool is that? (Note: I found stability problems when importing lots of songs at once with this installed.)

• I have long suspected this to be true: how eBayEBAY sellers fix auctions. (Times of London)

• The Really Big Picture: "When it comes to consumer electronics, I dream big and buy small. My fantasy living room features a wall of 103-inch plasma screens, some terabyte hard drives to store my collection of Blu-ray DVDs, and a couple of sets of quarter-million-dollar German speakers. My actual living room has a 20-inch TV-VCR combo unit, an $80 DVD player, and an iPod docking station." (Slate)

• Video email turns heads at DEMO 2007.

• Books: Mapped: "So why not visualize places mentioned in books on a map? Now you can. Our team has begun to animate the static information found in books by organizing a sample of locations from them on an interactive Google Map, with snippets of text from the book, and links to the actual pages where the locations are mentioned." Examples: War and Peace, and The 9/11 Commission Report.

• PC magazine presents: The Worst Products of 2006.

• What Makes People Gay? "The debate has always been that it was either all in the child's upbringing or all in the genes. But what if it's something else?" (Boston Globe)

Quasi-related: More money, better sex. "The richer you are, apparently, the better sex you have. That's according to a recent survey of more than 600 high-net-worth individuals. And rich women, it seems, enjoy sex the most." (MarketWatch)

• The Harvard Business Review's Breakthrough Ideas for 2007.

• Global-Warming Report Gets U.S. Emphasis: U.S. government scientists Friday said the long-term outlook for global warming may be more dire than suggested by this week's United Nations' report, which they say doesn't fully address the impact of clouds and melting glaciers. (free WSJ)

• Panel warns on Great Barrier Reef: Australia's famous Great Barrier Reef could be dead within decades because of the effects of global warming, according to a leaked report. The report, from the Intergovernmental Panel on Climate Change (IPCC), warns that the reef's coral could be bleached because of warmer seas. (BBC)

• Worst moments in customer service.

• Milk meets Coffee: Amazing high speed photography.

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MUSIC BOOKS MOVIES TV FUN!

• Alan Greenspan memoirs out in the fall: The Age of Turbulence.

• Is Apple Setting CD Prices? Last week, we noted that the Top 5 Amazon Music Sellers Are Under $10. An anonymous industry insider agrees that price has become key. He explains that Apple'sAAPL iTunes' 99 cent song and $10 album is the prime driver of the physical CD price cuts at Wal-MartWMT, Best BuyBBY, AmazonAMZN, etc.

• The insanely great songs Apple won't let you hear. (Slate)

• Harry Connick Jr. released a good pair of albums, with part of the proceeds promoting a good charity, too: Two separate CDs -- one instrumental album, one vocal -- of his favorite New Orleans songs (video here). Part of the proceeds of each go to the Musicians Village in New Orleans. (You can stream some of the songs here.)

• We mentioned Meet the Smithereens! late last year. The album is now out, and garnering very good reviews: Interpreting the Beatles Without Copying. Also Beatles stamps the Royal Mail (Beatles get their own postage stamps.)

• Mao: The Unknown Story Was Mao worse than Stalin or Hitler? That's the controversial premise of this book.

• Readymechs are free, flatpack toys for you to print and build. They are designed to fit on an 8.5"x11" page and printed with any printer. You'll need double-sided tape, thick matte paper, and 10-15 minutes for build time. Way cool!

• What if your entire life were conceived as a corporate annual report?

• The Wikipedia List of Unusual Articles.

• When Harry Met Sally recut as a thriller.

• Bill Gates on The Daily Show. (Best part: Jon Stewart trying to get Bill Gate's password)

That's all from here, where a frigid cold enveloped the Northeast -- where my trusty Oregon Scientific tells me it's 24 degrees (It was 18 on Thursday.), but none of that matters: This weekend, we fire up the 103 inch plasma for the big Superbowl game. (If another person asks me if I am rooting for the Bears...)

But don't go to their Web site -- the Super Bowl site was hacked, and seeded with exploits...