Linkfest: The Week Ahead
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Yesterday, we looked at the week gone by. Today, we look at the week that will be.
All eyes will be on the Fed: The two-day FOMC meeting begins Tuesday, with the policy announcement scheduled for Wednesday at 2:15 p.m. EDT. (Insert the Halloween trick-or-treat cliche of your choice here.) While a quarter-point cut is widely expected, some people are still agitating for another half-point cut. Via The Wall Street Journal comes this quote from Lee Hardman, a currency economist at Bank of Tokyo Mitsubishi in London: "The potential for a 50-point cut should not be ruled out, given the rapidly deteriorating conditions in the housing market and dislocated financial-market conditions." (Greatest story never told?)
A half-point cut certainly would goose the markets initially. The more ominous implications -- about inflation and why the Fed was panicking -- might take longer to have any resonance.After the FOMC, the October nonfarm payrolls report is the highlight of the week's economic news. Due out Friday, it could do a lot to set interest rate expectations. The usual employment-related data points are also scheduled: On Wednesday, we'll get the ADP Employment Report, as well as the Employment Cost Index. Thursday will bring the Monster Employment Index, the Challenger layoffs report, jobless claims, and personal income and outlays. Also on the docket is the first look at third-quarter gross domestic product, the Institute for Supply Management's manufacturing index and pending home sales. My personal view is that given how artificially low the official inflation data is, GDP will be commensurately artificially high. Not artificially high are oil company revenues. The wild card for the major integrated oils is the widening spread between gasoline prices and crude. That may hurt refining margins, and profits. Sunoco (SUN) and Constellation Energy (CEG) report Wednesday. On Thursday, it's Exxon Mobil (XOM) and Marathon Oil (MRO), and on Friday, Chevron (CVX). The week's earnings parade kicks off Monday with Verizon (VZ) and Kellogg (K). Procter & Gamble (PG) gives numbers and guidance on Tuesday, as does Colgate-Palmolive (CL), Qwest (Q), Liz Claiborne (LIZ) and Office Depot (ODP). Alcatel-Lucent (ALU) and Kraft (KFT) are Wednesday, as is Prudential (PRU). Sprint Nextel (S) reports Thursday, along with Electronic Data Systems (EDS). On Friday, Warren Buffett's Berkshire Hathaway (BRKA) reports. Also Friday, we'll hear from Cigna (CI), International Paper (IP) and Viacom (VIA). Where to begin today? The Fed? Housing? Technology? Earnings? No worries, mate, we've got your back. It's Linkfest!:
INVESTING & TRADING ¿ U.S. stocks turn to Fed for direction next week: "After a week of gains led by technology earnings, the market will have its focus firmly back on the ailing U.S. economy next week, this time with strong hopes that the Federal Reserve will again cut interest rates on Wednesday." (MarketWatch) ¿ Why is Crude Oil at $92? ¿ Some Bulls See Hope in Buybacks: "No matter what else theybuy and sell, companies trade their own stocks from time to time, hoping to buy low and sell high, as the old adage advises. Net equity issuance -- the amount of stock sold by companies minus the amount bought -- is tracked by Wall Street strategists because of its strong correlation with stock market moves. High issuance often heralds falling share prices; low figures tend to precede periods of market strength." (The New York Times) ¿ Microsoft (MSFT) Planning to Buy 100 Companies Over Next 5 Years. ¿ Earnings Reports Improving: "So far, 37% of the S&P 500 firms have reported (185 companies). The results have been better than most have feared, and over the past few days the results have been getting better. The median year-over-year growth rate has climbed sharply. We are now back in double digits, which if maintained would make this the 21st straight quarter of double-digit growth. Just last week, the median growth rate stood at 7.14%, the surprise ratio at 2.1:1 and a median surprise of 2.90%." (Zacks) (Please note that Thomson measures earnings differently, and has S&P 500 earnings declining 1%.) ¿ How has the Hindenburg Omen performed? I've never been a big fan, but someone else crunched the numbers... ¿ Why Kerkorian thinks jumping into the Oil industry is a safe bet: "Nearly a year after ending his $1.6 billion assault on the management of General Motors Corp., 90-year-old corporate raider Kirk Kerkorian told Wall Street on Friday where he's parking the money: Oil." (MarketWatch). ¿ Compare and contrast:That's all folks. Anyone wishing to make donations to help out victims of southern California's wildfires may find this short list of charities helpful. 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.- Microsoft's Earnings Are Just Another Excuse to Sell a Rally. (Real Money) - Microsoft Looks Mighty. (TheStreet.com)
ECONOMY & THE FEDERAL RESERVE ¿ Two-Thirds of Americans Say Recession is Likely: "When looking at recession forecasts, you need to note two things: Economists, as a group, have never correctly predicted a recession; On the other hand, the public, as a group, has predicted nine of the past four recessions ... Many of the the tax policy and capital gains/dividend issues polled are also relevant to investors." ¿ Wall Street Wants 50, Fed May Give Zip for Now: "Some Wall Street analysts are claiming financial markets have taken such a turn for the worse that Federal Reserve officials should cut interest rates by a half-percentage point next week. That's not going to happen, nor should it. A quarter-point cut is a closer call, though some officials don't think it's needed at this point." (Bloomberg) ¿ Inflation Ex-Inflation to be Official Fed Policy?: It is, according to voting Fed Governor Frederic Mishkin, who tells Bloomberg that inflation minus food and energy is a "better guide." ¿ How Fed Officials Might Perceive Interest-Rate Options: "When the Federal Reserve meets Tuesday and Wednesday, it faces another tough choice on interest rates. Standing pat retains some appeal, given the aggressive rate cut just last month. But markets put high odds on a quarter-percentage-point rate reduction, given a string of downbeat economic and profit reports, and see a small possibility of half a point. How will Fed officials assess these options?" (The Wall Street Journal)
HOUSING ¿ Can Housing Be "Rescued?" "The problem in the housing market is really, quite simple: Over the past five years, hundreds of thousands of people -- perhaps a million buyers or more -- were creatively financed into homes that they cannot afford. Combine this with still-overpriced homes, and the ongoing inventory build, and that's a recipe for a prolonged, multiyear slump in housing. This may not be what people want to hear, but it is unfortunately true: Forget the 2/28 ARMS, the teaser rates, the interest-only loans. If we were to magically reset every one of those problem mortgages at a 6.25% fixed-rate 30-year mortgage, it would not 'fix' the housing problem. A huge swath of them, perhaps a majority, would eventually default anyway." ¿ Realtors keep bright outlook despite cloudy data: "Although six months have passed since the cheery chief economist of the nation's top realty trade association resigned, the trade group still holds an uncommonly bright view of the battered homes market." (Reuters) ¿ For sale: 2 million empty homes. (CNN)
TECHNOLOGY & SCIENCE ¿ Blogs: The Next Takeover Target? (BusinessWeek) ¿ The Trouble with Men: "Deadbeat granddads, life-shortening sons and genetically bullying brothers these are just a few effects revealed in biologist Virpi Lummaa's studies of how evolutionary forces shape later generations." ¿ Forbes has a special feature on The Future.
MUSIC BOOKS MOVIES TV FUN! ¿ And just in time for the holidays: The first Pixar Short Films Collection gets released Nov. 6. ¿ Colbert vs. Stewart: Has the student surpassed the master?
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