NEW YORK (
) -- Good Sunday afternoon, and welcome to another edition of Weekend Reading. First a look back at the week that just finished, then a look forward to the week ahead and, lastly, a summary of articles and papers worth reading.
It was the worst month on the markets in a year, and the worst May for the
since 1940. Capped by a dopey and late Fitch downgrade of Spain, May ended with the Dow down 7.9%, while the
lost 8.2% and the
lost 8.3%. If investors were selling in May and going away, as the old adage goes, then they must have been planning to go off the planet.
It is a toxic combination of things that has hurt the market so much. It started with European sovereign credit problems and then turned into a long overdue correction. Now there are worries that developed economies will slide back into recession as stimulus runs out.
It hasn't helped that
massive Macondo leak in the Gulf of Mexico
has investors even more concerned about the impact on oil prices in the future, as deepwater oil production, a swing source, becomes an even more marginal one.
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Looking ahead to next week, it seems as though European concerns are fading somewhat. Granted, the issues remain, but European sovereigns and the ECB are at least looking as though they're more on top of the issue. Yes, this only pushes the problem further down the road -- European sovereign debt needs to be restructured, not simply refinanced with the ECB as a buyer with crappy collateral -- but the likelihood of a successful restructuringright now was low.
The broader issue that still hasn't been thought through adequately remains the impact of Macondo, which will play out in energy, food and other markets. The leak will continue at least into midsummer with the failure of the "top kill" procedure.
None of this may matter next week though. Markets feel deeply oversold, perhaps the most oversold they have been in the current recovery. It would take very little -- maybe just the absence of anything unexpected -- to drive markets higher in the short run.
Turning to economic indicators, next week will bring several important reports, including the Institute for Supply Management's manufacturing and service-sector indices and the May nonfarm payroll report.
As for earnings, companies slated to report next week include
The Bank of Nova Scotia
Lastly, here are some articles and papers worth reading:
Editor's note: To access some of these stories, registration or a subscription may be required. Please check the individual links for each site's policy.
- LaborUnrest May Signal New Phase in Chinese Economy (The New York Times)
- Good interview with Ray Dalio in this weekend's Barron's -- no inflationahead (Barron's)
- Production, Proved Reserves and Drilling in the Ultra-Deepwater Gulf of Mexico (Energy Information Administration)
- Pushed to Lower Salt Use, Food Industry Pushes Back (The New York Times)
- BP share price fear over latest setback (Telegraph)
- OurFix-It Faith and the Oil Spill (The New York Times)
- Documentsshow early BP concerns about Gulf well (The New York Times)
- Oilboom underway in North Dakota (Platts.com)
- Anhour with Marc Faber on the next AIG(AIG) - Get Report (Infectious Greed)
- TheWorld Cup: it's about more than football (Telegraph)
- EuroDisney hit by growing debt fear (Telegraph)
- Credit card habits show signs of change as consumers pay off debt, save more (The Washington Post)
- Toward a global risk map (Bank for International Settlements)
- Americancities at risk of default and bankruptcy (Fortune)
- Spain races to avert banking crisis as euro faces slide (The Sunday Times)
- Three nations as one in bid to strengthen ties over 10 years (Shanghai Daily)
- Commods forecasters should embrace uncertainty (Reuters)
- Council of perfection on lost decades (Reuters)
- San Andreas-like fault found in eastern U.S. (Discovery) -- Written by Paul Kedrosky in La Jolla, Calif.
At time of publication, Kedrosky had no positions in stocks mentioned, although holdings can change at any time.
Dr. Paul Kedrosky is a former highly ranked sell-side technology equity analyst, and he currently runs a technology finance institute at the University of California, San Diego. He is also a venture partner with Ventures West, an institutional venture capital firm with more than $400 million under management. He maintains a widely read blog called
Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Kedrosky cannot provide investment advice or recommendations, he appreciates your feedback;
to send him an email.