Interest rate fears and new-year repositioning gave a negative tone to the start of 2007. Fear and anxiety ran through the markets, narrowly avoiding tech and biotech stocks. The Fed minutes from December's FOMC meeting, released Wednesday, were unsurprisingly hawkish. But when traders realized the Fed wasn't discussing a more neutral stance, an early morning rally reversed. Friday's strong nonfarm payrolls report, a higher than expected 167,000, was a surprise, given an earlier forecast for a loss of 40,000 jobs.Once again, RealMoney's bloggers were all over the market action, and we'd like to share the best of their commentary this week with readers of the TheStreet.com. These posts best capture the intent of these blogs, which is to provide intelligent discussion on the issues each writer sees as most pressing that day. Let's take a look at Jim Cramer on the trade, Rev Shark on putting away the New Year's party hats, Cody Willard on the trouble with Google ( GOOG), Steve Smith on a clean slate for 2007 and Tony Crescenzi on two kinds of bond selloffs.
Cramer's Blog: Get Hip to The TradeOriginally published on 1/4/2007 at 10:51 a.m. Bizarre: The Nasdaq keeps wanting to ramp here. People want to get behind this group even as, seasonally, you aren't supposed to. I keep focusing on Qualcomm ( QCOM) as the tell. Here is a company that just got word it's being investigated for antitrust issues in Korea. It keeps spending big money on law and patent suits on its competitors and customers! It's linked to the cell-phone story, which is among the weakest of the tech stories. It preannounced to the downside. And it can't stay down. That's just nutty, or is it? Traders feel that commodities went up too much and tech did nothing. So the trade is to sell commodities -- all commodities -- and buy tech growth. I never question this stuff. I just accept it. The trade should last until the quarters are announced and Microsoft's ( MSFT) Vista ships -- pretty much at the same time. I'd play it while not overlooking that Oil Service HOLDRs ( OIH)
Rev Shark's Blog: Put Away the Party HatsOriginally published on 1/3/2007 at 12:25 p.m. As I mentioned earlier, my working thesis is that strength in the first few days of 2007 will set us up for a very sharp dip within the next couple of weeks. I believe there are several things that are coming together right now that are going to trip us up, at least momentarily. Foremost is the very high level of complacency. We have bullish forecasts across the board for 2007 from pundits and gurus, a widespread belief that housing has bottomed, and little doubt that a soft economic landing is about to take place. Some are even saying that this is an "amazingly positive moment" in the market. Throw in weak oil and the large amount of cash in private-equity funds, and what choice do we have but to go up? We may indeed have a very good 2007 when we close the books a year from now, but in the short term, the anxiety to jump in big at this point and to worry about underperforming is exactly the emotion that tends to trigger sharp reversals. This is highly emotional trading right now, and as buying power is depleted and the excitement about the new year ebbs, the driving force behind this rally will dry up quickly. That will trigger the rush for the exits and give us a nasty little dip. I can almost see the market beast licking his chops right now and planning on how he is going to pull the rug out. Enjoy the new year euphoria, but don't trust it to last for long.
Cody Willard's Blog: Cracks Spread in Google's ArmorOriginally published on 1/3/2007 at 10:14 a.m. Google used to get it. I mean, in a pure sense, this company really got it. I used to
- Is it content-source agnostic or not? Click on its video page and see it try to guide you to videos that it can sell and get a cut for. You lose consumers' trust when you try to sell them information from favored sources, rather than just acting as a blind conduit. Google's much-ballyhooed Gmail API strategy, in which it was going to allow the 1.5 billion people on the Internet full control of their Gmail accounts, has been quietly terminated. Oh, sure, Google is still offering the ability to develop Gmail applications such as task-bar notification of new emails, but it has quietly shuttered the ability to log in and control your Gmail account from any site but the actual Gmail site. Where was the press release announcing that change, which rendered hundreds of applications developed off the Gmail API worthless? Google didn't exactly hype that change the way it did the launch of the original Gmail API. Here's the third and outright evil example of Google having lost its way: It's fighting against private-ownership rights as it attempts to enlist the U.S. government to stop innovation of Internet-like networks. The catch phrase for this battle comes from Google and its brethren, who call it "Net Neutrality." Google is pretending that it's fighting for some sort of level playing field, when it's actually fighting for "Forceful Net Control" (a much more accurate term that I'll coin for it). Verizon ( VZ) and other companies are sinking tens of billions of dollars into their physical networks, which they think will enable all kinds of new killer apps that would collectively take us into Web 3.0 and beyond, making Web 2.0 look like a minor stepping stone into the future. But Google and its cronies are sending millions upon millions of dollars to your representatives and asking them to freeze the current Internet in place. Google says it's acting in the best interest of consumers and end users. Why the use of force then? A truly "non-evil" company would have no interest in using governmental force to stop attempts at innovation. A truly "non-evil" entity would want Verizon to risk billions innovating its network and figuring out ways to monetize such investments. Using force to stop innovation sounds awfully evil to me. And I'll cynically call this one like it is and say that Google's evil here stems from the fact that it knows it has won this version of the Internet and wants the government to make sure it stays on top. Evil is as evil does.