Weekend Reading: Bulls Have Reason to Give Thanks
By Paul Kedrosky
Special to RealMoney.com
11/30/2003 02:34 PM EST
URL: thestreet.com
News Analysis NEUTRAL
Markets performed in line with history.
Wal-Mart turns in record sales.
The week's winners were mostly in tech.
Good Sunday morning. Here are some articles and papers worth reading, but first a look at the week (and month) that just finished, and a look at the week ahead.
It was a happy Thanksgiving for the markets. As I pointed out last week, Thanksgiving tends to be a bullish break for the markets. RealMoney subscriber J.D. wrote in earlier this week to confirm it:
"Post-1970, the average S&P 500 return in the day preceding Thanksgiving is 0.31% and 0.33% on the subsequent day. The market rallies on 79% of occasions in the preceding day and 76% of the time in the subsequent one relative to a 52% general tendency to appreciate."
We performed not far off last week. The markets averaged a 0.37% gain on Wednesday, and then turned in an average 0.1% gain Friday. On the week, all three major averages were up sharply, with the Dow Jones Industrial Average and S&P 500 up 1.6% and 2.2%, respectively, and the Nasdaq up a spiffy 3.5%. Not bad at all for a holiday-shortened week with light volumes throughout. For the month, things were solid, if not quite as impressive. The S&P and Nasdaq were up 1.7% and 2.45%, respectively, while the Dow dangled, losing 0.2% in November. Please click here for a summary of the week's action.
In the week (and month) ahead, a lot of interesting forces are in play. People will be watching Thanksgiving sales reports to see how the current retail season is looking. Last year's sales started strongly and then tapered off as December progressed, leading to unimpressive Christmas sales overall. Early indications are that Thanksgiving shopping was busy over the holiday, with Wal-Mart (WMT:NYSE) turning in a record $1.52 billion in sales. Retail analysts are expecting 5% to 7% gains overall, and Wal-Mart's results are in line with that kind of performance. Speaking entirely subjectively, malls (which I visited only under formal protest) this past Friday were very busy here in San Diego, with -- in Southern California fashion -- helicopters hovering overhead to comment on the shopping like it was a sporting event.
This week's winners' list was all technology again. And people must have wished they had pieces of EGHT (8x8 (EGHT:Nasdaq) ), because the company was up a darn impressive 130% on the week. It was a remarkable performance for this newly refurbished VOIP, or voice over Internet protocol, company: It has climbed all the way to $7.52 from 17 cents back in January. The company sold its semiconductor assets last week, making it a relatively pure VOIP story. And with people wangling for VOIP positions before the FCC meeting Monday, the company rode a rocket all week. Does it make any sense? No. Is it all emotion? Sure. But does it matter? Of course not -- such is life in the cheery world of spec tech.
On the list of weekly losers, once again it was a close thing, with a number of stocks in the downbound race. First place among losers, however, went to Sigma Designs (SIGM:Nasdaq) , a maker of MPEG-4 technology for DVD encoders. The company declined 16% after reporting earnings of $7.5 million vs. the $8.8 million for which a whopping two analysts had been looking. It also hurt that the company mumbled during its midweek call about low-end price competition. (In tech? Say it ain't so!)
Next week will bring a new month, and things should become even more interesting. The ever-migrating January effect has provided a goad to December market performance in recent years, so there will certainly be some upward technical pressure. And people won't have missed solid recent economic data, which will also tend to push things ahead. But on the other side, we have already high-ish prices, as well as the declining dollar, which hit new all-time lows against the euro last week.
On the economic front, it is an active week, but there is no real barnburner number to watch. We have payrolls Friday, as well as the weekly employment numbers, but the markets have seemingly become sanguine about this issue after fretting about it for much of the year. The Institute for Supply Management will release its manufacturing and services sector indices on Monday and Wednesday, respectively, and the former is expected to improve, while the latter may decline marginally.
It will be a quiet week in earnings news. We have Navistar (NAV:NYSE) and Vivendi (V:NYSE) due Tuesday, which will both be watched, albeit for very different reasons. The former has been a strong performer this year, and there is a sense that the cycle may have passed. The latter will be scanned for signs of continuing improvement in the advertising market, but it will also be a broader media indicator as well. Finally, we have Albertson's (ABS:NYSE) on Friday. The strike-plagued grocery retailer has been beaten up over its ongoing labor-relations struggle, but there is news over the weekend that negotiators are back at the table. Its earnings performance will be tightly interlocked with its posture at the table, and vice versa.
Finally, here are some articles and papers worth reading:
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The big business in small news: how companies try to hide news late on Fridays and during holidays. (Reuters)
The Fed is indicating to its favored few that it will soon stop saying that it plans to leave rates low for a considerable period. (Reuters)
Despite the 80% job losses in switchboard operators since 1970, the real loser is the consumer if we are protected against job losses. (Townhall.com)
You're not the only one thinking there is too much to read out there: One man is still working through 2002's news. (New Yorker)
George Soros argues that the U.S. is in a supremacy bubble -- and it is about to burst. (The Atlantic Monthly)
Modeling the next liquidity crisis: What would happen if a major investment bank pulled out of the derivatives market? (Risk)
The Christmas tree in New York's Herald Square has a free WiFi station on top, courtesy of Yahoo! (YHOO:Nasdaq) . (NY1)
Despite surpassing box office receipts in 2002, the video game market is entering a cyclical downturn with a 2005 exit. (In-Stat)
Wireless LAN services are still losing money in buckets, and the situation won't improve until 2008. (Electronics Weekly)
The NHTSA is on the verge of creating massive new semiconductor market in tire pressure gauges. Who will the winners be? (EE Times)
The current bond disconnect apparently means good economic news isn't bad for the bond market anymore. (The Economist)
Gateway's (GTW:NYSE) big bet on consumer electronics has many skeptics singing the usual "watch out for Dell (DELL:Nasdaq) " chorus. (AP)
Inside Apple's (AAPL:Nasdaq) iPod success, and a typically peevish interview with Steve Jobs. (New York Times)
The Sunday Times reviews Robert Rubin's new book. (New York Times)
Underground storage problems undercut the ability to create significant Iraqi oil reserves. (New York Times)
The only significant economic issue remains the global political situation. (Value Line in The Washington Post)
An interview with Steve Ballmer of Microsoft (MSFT:Nasdaq) -- surprisingly conservative growth prospects. (Business Week)
A list of steel firms entering bankruptcy with underfunded pension plans. (Globe & Mail)
The financial marketing value of ringing the NYSE's opening bell. (Globe & Mail)
Tax cut stimulus may soon go awry. (New York Times)
Data bias problems imply that the average hedge fund underperforms the average mutual fund. (New York Times)
Massive investments at ski resorts seem to be paying off for Intrawest (IDR:NYSE) , et al. (San Francisco Chronicle)
Strategies for periods of increasing uncertainty, both political and economic. (Merrill Lynch/Bernstein -- PDF)
Smith Barney's Levkovich says oversupply may create pricing pressures in semiconductors. (Smith Barney -- PDF)
Google is more of an internal operational mess than fans of its upcoming IPO might like. (Fortune)
Online shopping has entered the mainstream, both for consumers and industrial buyers. (News.com)
Defrocked equity analyst Henry Blodget is now writing on the Martha Stewart trial for Slate. (Slate.com)
Oil prices are falling on reports of OPEC overproduction. (Oil & Gas Journal)
Barron's has a fascinating interview about mining distressed companies, like Enron, Safety-Kleen, Kmart (KMRT:Nasdaq) and Blount (BLT:NYSE) . (Barron's)
Research: Why is Manhattan real estate so expensive? Blame regulation. (NBER)
Research: The anatomy of daytraders: They have no information edge; they are male and in their late 30s. (UCLA working paper)
Research: While counterfeit U.S. currency is a worldwide problem, it is not as large as you might expect. (Federal Reserve)
Research: Pegged currency regimes are more crisis-prone than floating ones. (IMF)
Research: Stock message boards influence trading volatility much more than price. (Journal of Finance -- PDF) |
