Weekend Reading: Comparing Recessions

Welcome to another edition of Weekend Reading. First, we'll look back at the week that just finished, then we'll look forward to the week ahead. Last, I'll present you with some articles worth reading.

It was another crummy week for the major markets. The Dow ended the week down 4.4%, while the S&P 500 lost 4.6%, and the Nasdaq Composite fell 4.5%. The main culprit was the general consensus that we're now in a recession, plus a growing sense that some sectors -- especially insurance, credit cards, and retail -- are seeing a new round of slowing.

Looking forward to next week, it seems reasonable that we'll find our way to lower levels yet. Blame China. That country's wild stock markets were closed all of last week, and they have some catching up to do, which should happen by midweek. It's hard to imagine how that selling won't find its way into North American equities. Furthermore, there's a plethora of stories in the popular press this weekend saying consumers are cutting spending and generally feel like a recession is already here.

Turning to economic indicators, there are a few worth watching. We will see data on January retail sales Wednesday, January industrial production Friday, weekly jobless claims Thursday, plus preliminary February consumer sentiment Friday. Also, on Thursday Federal Reserve Chairman Ben Bernanke plans to testify on the economy before the Senate Banking Committee.

As for earnings, quite a few noteworthy companies are reporting, including Schering-PloughSGP, Applied MaterialsAMAT, Coca-Cola EnterprisesCCE and General MotorsGM. The key thing to look for will be these companies' outlooks. Investors want to see where we are in the recession cycle: still descending, at the bottom or coming out.

Finally, here are some articles and papers worth reading:

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• Loew'sLTR Joe Rosenberg on the MicrosoftMSFT-Yahoo!YHOO deal's bad numbers. (Fortune)
• Yahoo! set to rebuff Microsoft bid as too low. (Reuters)
• Yahoo!'s institutional investors may be less eager for major price hike than some think. (Bespoke)
• Barron's picks food companies and SunPowerSPWR. (Barron's)
• Records tumble for commodities with major gains. (Los Angeles Times)
• This Year, Commodities Are on a Rockier Road. (The New York Times)
• Rumors of aggressive AppleAAPL $100 iPhone/Touch price cuts. (9 to 5 Mac)
• Investors are making all the wrong comparisons about the current weakness. (Forbes/Fisher)
• Auto dealers preparing for rough times as they are in San Francisco for major convention. (San Francisco Chronicle)
• Home loans pain 'worst since 1990.' (Telegraph)
• Memory prices plummeting, with prices below cash cost. (vnunet.com)
• Financial footnotes and trouble with financial accounting. (FRB)
• The effect of a recession on oil prices. (EIA)
• Dollar on track for biggest weekly rise since June '06. (Reuters)
• People more willing than ever to walk away from mortgage debt. (The Wall Street Journal)
• Idle speculation out there about a $75/share deal for salesforce.comCRM by OracleORCL. (Silicon Valley Watcher)
• Global Finance Leaders Warn of Risk From U.S. Housing Woe. (The New York Times)
• Messages Show Details of French Trader's Actions. (The New York Times)
• The Japanese bubble: Alarming parallels with U.S. (International Herald Tribune)
• Sovereign wealth funds are helping to stabilize U.S., but at what price? (IDD)
• There is still room for small hedge funds. (IDD)
• There is a growing sense (oh, really?) that FICO credit scores are adrift and too easily manipulated. (BusinessWeek)
• Top schools bought interest-rate swaps without ever knowing the prices, with millions in subsequent losses. (Bloomberg)
• Why can't major global central banks get on the same rate-cutting page? (Bloomberg)
• Major companies with ties to child labor implicated in Forbes cover piece. (Forbes)
• The geography of U.S. recession: big differences across states. (The Economist)
• Drug regulators re-evaluating Botox's safety. (San Francisco Chronicle)
• StaplesSPLS cuts expenses as recession looms. (Boston Globe)
• How consumers have become a sputtering economic engine. (The Washington Post)
• Disney'sDIS major amusement renovation plans have some wondering if they will work. (The New York Times)
• People who drive fast tend to trade too much too. (The New York Times)
• Do Hedge Funds Profit From Mutual-Fund Distress? (NBER)
• What's in a (domain) name? Some serious cash. (Christian Science Monitor)
• New Fama and French paper on rethinking the book-to-market ratio. (Journal of Finance)
• Is the U.S. subprime crisis really so different? (Rogoff/Reinhart)