Cruel January! Investors counting on Fed cuts were delivered bad news on Friday. Talk about the soft prejudice of low expectations: 167,000 new jobs barely keeps up with population growth.The report sent both stocks and bonds tumbling. The Trader column (in the new smaller Barron's) noted:
"The week's steep slide in oil and copper prices failed to mollify investors. Without paying too much heed to the annual flip of the calendar, performance-chasing fund managers who had to run after the 2006 rally now get a fresh 12-month window to earn their keep. And they could -- for now -- wait for better openings to pounce."The Dow slipped half a percent, the S&P 500 fell 0.6% -- the second decline in three weeks for both -- while last year's laggard, the Nasdaq, started the year off on the right foot, gaining 0.8%. On a personal note, these linkfests have been getting increasingly longer, and are taking more time to write than they used to. My New Year's resolution is to throttle them back a bit to a more manageable size this year! Oh well, we still have time for one more ginormous festival to start off the new year: Editor's note: To access some of these stories, registration or a subscription may be required. Please check the individual links for the site's policy.
Another winter weekend, and it got up to 72 degrees! The ragtop comes out of the garage again! My collectors insurance ($223) is for only 3,000 miles a year, and if the weather stays this nice in January and February, I may exceed that! Welcome back to RealMoney, George!
INVESTING & TRADING¿ The Wall Street Journal: After the Dow's 2006 Rise, Investors Ponder a Correction. In a reversal of 2006, the Dow and SP 500 were the worst performers, while the Nasdaq made gains. ¿ The first official trading session featured a pretty ugly intraday reversal. ¿ U.S. regulators grow alarmed over 'hedge fund hotels.' Just as VCs during the technology boom created incubators to help entrepreneurs start businesses, so too are a few big investment banks offering young ambitious hedge fund traders a temporary home, complete with receptionists, espresso machines and consultants to help manage them. ¿ Global Returns in 2006 Revisited. ¿ How important has liquidity been this past year? The WSJ writes: Investors are Riding The 'Cash' Rapids. There's plenty of money available, and much of it is in riskier markets. Also, Money Is Everywhere, But for How Long? ¿ Mark Hulbert on January's Predictive Powers. ¿ Dow Theory Suggests Stock Worries Ahead. ( Barron's) ¿ I've been playing with the WSJ's updated Markets Data Center. (free) It's no Bloomberg terminal, but it's very complete, and a heckuva lot cheaper. ¿ The WSJ looks at social networking stockpicking sites: A New Way To Rate Stock Tips. I much prefer James Altucher's Stockpickr: More data, less chatter. (Say it with a Boston accent; it rhymes!) ¿ Five Sector Funds You'll Need in 2007. ¿ Profits Likely to Slow in '07. ( WSJ) ¿ Are bonds a viable alternative to stocks in 2007? ¿ Barron's notes insiders collectively sold 55 shares for every one they bought in the first two weeks of December: Insiders were big Sellers. (If no Barron's, go here.) Gee, you think they could have waited two weeks to avoid the tax bite in April. ¿ He's Jack! Nardelli's Ouster Shows GE's Welch Picked Right With Immelt. ( Bloomberg) ¿ James Dines' The Dines Letter is MarketWatch's Investment Letter of the Year 2006. ¿ Tony Crescenzi on Seven Reasons to Downplay the Yield Curve. (I obviously disagree.) ¿ Does the markets' 4-year winning streak mean there will be a decline in 2007? It turns out there is no statistical support for that thesis. ¿ The Wall Street Self-Defense Manual. (Blodget) ¿ The price-to-dividend ratio. ¿ Is your boss a liar? That's too bad. It's bad for productivity, morale and profits.
ECONOMYWhat Wall of Worry?: ¿ The New York Times: Job Growth Is Strong, Surprising Economists. (There's also a podcast.) Nouriel Roubini on Leading and lagging indicators of the labor market. Also, Jobs Data Brighten Economic Picture (free WSJ). BLS data is always subject to revision, but if it stands, then ADP ( ADP), Monster ( MNST) and I all got this one wrong. ADP claims that December is an especially perilous month to compare the two reports (because ADP's numbers have to be adjusted for end-of-year tax accounting in ways that the Labor Department's do not). ADP is, after all, a payroll processing firm. ¿ The Goldilocks Recession? ¿ Whatever wage gains there have been are getting eaten up by exploding health care costs. ¿ Why Manufacturing Shows Resilience: U.S. manufacturing is showing surprising resilience in the face of a sharp slump in autos and housing, and in the coming year it is expected to expand roughly in line with the overall economy. ¿ Copper prices tumble after U.S. construction spending drops. (See also: Copper, commodities sell-off may signal slowdown.) ¿ ECRI -- which has an admirable track record -- says Says Recession 'No Longer a Serious Concern.' ¿ Could the world shrug off U.S. Recession Concerns? Economic might may be shifting to old stalwarts. ¿ Economy Poised For '07 Rebound, Forecasters Say ( WSJ). U.S. Trust's Robert McGee was the most accurate forecaster in the 2006 second half. Here's what he sees in 2007. See also Economists Cautiously Optimistic About 2007. ¿ Stephen Roach's Lessons of 2006. ¿ The Baltic Dry Index (BDI) shows global growth remains strong. ¿ Three Factors for '07: Housing, Fed Moves And Capital Spending. ( WSJ) ¿ How Business Trounced The Trial Lawyers.
RETAIL/CONSUMER SPENDINGI keep wanting to retire this topic, but it keeps staying relevant: ¿ Retail Sales Roundup. ¿ What does it mean now that holiday retail sales have dissappointed? "Holiday retail sales, once considered a barometer of the health of the economy, are no longer a crystal ball." Holiday-Sales Figures Leave Big Gaps. ( Forecast: The baloney machine will shift into overdrive by the spring.) Also, Holiday-Spending Estimates Decline. ¿ Flat-Panel TV Jam: Now that flat-panel television sets are the biggest hit in consumer electronics, manufacturers are wondering how to put off the forces that could turn them into low-margin commodities. In December, Best Buy and Circuit City sales rise. ¿ On a related note, the WSJ looks at the Battle for the Living Room. (free) ¿ The Whole Foods Story. ( Slate) ¿ Ron Lieber's 2006 Loyalty Report: frequent-flier miles, cash rebates and merchandise rebates, etc. ¿ Money Saving Tips for Life.
HOUSING¿ There's been a lot of spec construction on Long Island. Be sure to check out all the comments from builders and developers. They're quite informative. ¿ Bloomberg's Caroline Baum suggests that Housing Data Yield a False Sense of Complacency. ¿ Is the economy poised to shake off housing slump? Or is Lennar ( LEN) warning of further debacles? ¿ The Mortgage Lender Implode-O-Meter. Also: subprime lender Ownit seeks bankruptcy protection. ¿ The Historical chart of Residential Investment Cycles, 60 Years implies that the housing slowdown is still relatively young, unless this is repeat of the 1995 scenario. ¿ And for you hard-core geeks, Monetary Policy and the house Price Boom Across U.S. States.
FEDERAL RESERVEThe Fed was a big mover of markets this week, between the FOMC minutes and the speechifying: ¿ Parsing the Fed minutes. (Video with Greg Ip and Jon Hilsengrath) ¿ Fed Officials Move Toward a Neutral Stance on Rates. ¿ Pimco's Gross sees fed funds at 4.25% by year-end. Despite job growth, Gross thinks the Fed's biggest need is stoking GDP. ¿ Over the past 22 years, Jeff Kleintop of PNC Wealth Management has tracked price increases with his holiday inflation gauge: the Christmas Price Index. It's up 3.5%, considerably less than last year's 9.5%.
SENTIMENT/PSYCHOLOGY¿ New Year's Resolutions for Irrational Investors. ¿ Investors Greet New Year With Ambivalence. ¿ Three Pervasive Myths of Trading Psychology. ¿ Know thyself: Self Awareness and Trading.
MEDIA/ENERGY¿ The WSJ goes all YouTube on us with embedded flash video. Do-it-yourselfers can go to Hellodeo -- a new site that allows real time Web cam embedding of video (no more ripping and uploading). ¿ More headaches for the networks: News at Seven automatically generates a virtual newscast pulled from stories, images, videos and blogs all linked by a common news topic. ¿ Barron's Mike Santoli kicks off a new column, Streetwise. (If no Barron's, go here.) ¿ Has Malcolm Gladwell, author of Blink and the Tipping Point, finally jumped the shark? His defense of Enron as having done nothing wrong is, well, indefensible, and Joe Nocera of The New York Times calls him on it: Tipping Over a Defense of Enron. (Here's a podcast.) Nocera is relatively gentle on him -- there was a much harsher takedown in the NY Observer in Oct '06 -- but there seems to be a wee bit of a Gladwell backlash developing. ¿ 2006: Energy Year in Review. (Thanks, Paul!) ¿ The Land of Rising Conservation. On a related note, this interview with AES' ( AES) chief is fascinating: A Future With the Wind. ¿ Power-Sipping Bulbs Get Backing From Wal-Mart. See also Wal-Mart readies large-scale move into solar power.
WAR/POLITICS¿ Can Bush's Tax Cuts Survive? ¿ I got slaughtered by the alternative minimum tax last year: Senators seek repeal of alternative minimum tax. ¿ Rep. Frank Opens Door to Business: Proposed Trade-Off Of Agenda Goals May Ease Rancor. Also: Business Mobilizes to Defend Turf - Firms Plot Campaigns to CounterEffects of Democrats' Agenda. ¿ Stem-Cell Research is a test for Bush, new Congress. ¿ House Passes Ethics and Budget Measures. ¿ The War of the World: Twentieth-Century Conflict and the Descent of the West (for those interested in less serious war analyses, there's always Doonesbury.) And what might be the most unexpected book, an infantry team leader with the 3rd Stryker Brigade Combat Team of the 2nd Infantry Division pens a book of war poetry: Here, Bullet. See also: The horror, the horror of Iraq, in poetry. ¿ Opinion: Our Iraqi Mistake.
TECHNOLOGY & SCIENCE¿ Science news story of the week: A vast ice shelf -- more than 40 square miles in extent, over five times the size of central London, collapsed in the Arctic. It was located off a Canadian Island. Global warming issues aside, a large city floating south from the North Atlantic poses a shipping peril. ¿ How to go to M.I.T. for free. ¿ USA Today says Apple's new iPod could bolster music dominance. Apple is entangled in several patent and antitrust lawsuits. (Full disclosure: I am on the board of one such plaintiff.) ¿ The Macworld rumors have already started to fly: Macworld predictions for next week. ¿ Cringely's tech forecasts for 2007. No. 11: The year will see two kinds of large-cap tech and media companies: those that destroy shareholder value quickly by acquiring companies and those that destroy shareholder value slowly by not acquiring them. (Full disclosure: I am on the board of Burst.com.) ¿ Very cool BBC documentaries: The Secret Life of Machines is up at Google Video. ¿ A New Way to Gauge a Start-Up's Worth. ¿ Who knew this was even a hobby? For Extreme Tree Hunters, Redwoods Rule. ¿ Mindball, the new game where you move a ball with your mind. ( Video) ¿ Microsoft ( MSFT) gets some good and bad reviews:- Bold Redesign Improves Office 2007. - Zune is already a failure, thanks to the RIAA, sez Bob Lefsetz. (See No. 10 of his 2007 Predictions.)Also, see the WSJ's Rob Guth on Microsoft's evolving strategy. ¿ What carbon emissions are doing to the ocean: THE DARKENING SEA. ¿ The Twists and Turns of History, and of DNA. Also, The Science of Evil. ¿ YouTube's new owners may yet run into copyright troubles after their Piracy vow went down the YouTube. Also, a papparazzi video is casuing YouTube some trouble: It's of supermodel Daniela Cicarelli (ex-wife of soccer great Ronaldo) frolicking on the beach with her Merrill Lynch banker boyfriend. A Brazilian court ordered the site shut down until it removes a video from its site. But as fast as the company removes the video, Brazilian users keep uploading fresh versions!
MUSIC, BOOKS, MOVIES, TV, FUN!¿ We noted James Brown's passing last week. After that, I started poking around and discovered a live James Brown concert available for free download at NPR. ¿ Norah Jones has a new album, Not Too Late, coming out late this month. You can stream the first single here, or watch a video here. ¿ Lots of live streaming concerts from NPR. ¿ In 2006: Album Sales Plunged, Digital Downloads Soared. ¿ I have quite a few Books in the Queue. Also, Reminiscences of a Stock Operator is now in the public domain, and you can download a PDF of it for free. ¿ Fascinating: A Billionaire Divorce -- And Not a Lawyer in Sight. ¿ Hey parents!: Allowance 2.0. ¿ God Denies Talking to Pat Robertson. Supreme Being Calls Televangelist 'Delusional'. ¿ This will be the funniest thing you see today: Spiders On Drugs.