The Float

Wednesday Reading

Midweek sustenance for the inquisitive crowd...

• Two important questions from MarketBeat: The New Financial Rally -- Is It Real? and Has the Commodity Bubble Popped?
• The first cartoon in Barry's pair is especially apt.
• Calculated Risk notes NYT and WSJ coverage of rising mortgage rates.
• More from CR: The states' fiscal straits are just another canary in the very dusty coal mine known as the U.S. economy.
• Good stuff from Abnormal Returns on emerging markets equities as portfolio diversifiers.

Not Less...Fewer

Just because it's good. From The New Yorker...

Monday Reading

Today's whole-lotta-nothin' seems apt--a matter of digestion, if nothing else--after last week's furious snapback...

• We've been arguing for more than a year that U.S. consumers should (and will) enter into a period of balance sheet repair. On that topic, here's an interesting piece from the AP: "Will we stick to our newfound frugality?"
• From The Economist, the backstory behind all the trouble at Fannie and Freddie.
• And here's James Surowiecki asking a semi-blasphemous question (i.e., our favorite kind): Do we need Fannie and Freddie at all?
• Two interesting posts (here and here) from Barry Ritholtz on whether last Tuesday's reversal marked a bottom for equities.
• Bank of America is trading higher after today's not-as-disastrous-as-expected earnings release (though well off its intraday enthusiasm highs), but Calculated Risk notes a few less-than-encouraging items in the B of A conference call.

Friday Reading

This weekend, like so many, seems decidedly well-timed right about now...

• Granted, the sentiment rubber band was stretched pretty tight, but those who think the tough talk about short-selling hasn't contributed to this week's rally are kidding themselves.
• Here's more on the "Get Shorty" movement from Dean Baker (via Real Time Economics).
• As ever, the housing market is all about supply and demand, and they're stubbornly out of balance.
• More here on that from Real Time Economics.
• Acknowledging the lag in policy effects, Minneapolis Fed Prez Gary Stern makes hawkish noises about interest rates.

Wednesday Reading

The bulls seem to want it today. Very interesting times...

• Two items from Slate's Daniel Gross: "The Bailout Will Be a Bargain" and "Flat Is the New Up."
• Crude prices may be turning lower today, but that pesky consumer price index is heading the other direction.
• Yves Smith takes a cold, hard look at the possibility of a "financing crisis" for the U.S.
• Interesting news on David Tice's sale of his Prudent Bear and Prudent Global Income funds. Key passage from BusinessWeek.com's account: "People see a bear fund's trailing 12-month returns and compare it to their portfolios. They say 'I wish I owned that,'" Kathman says. "That's usually a pretty bad time to get into a bear fund."
• Ritholtz removes gloves, drops some serious science on those most responsible (if not accountable) for our current financial crisis.

Monday Reading

Traders: Fannie and Freddie get a bailout! Send the futures higher! Fannie and Freddie need a bailout? Send the futures lower!

• Tough weekend in retirement studies: Hewitt Associates and Ernst & Young crunch the numbers and confirm the ugly truth: Most Americans are financially ill-prepared for retirement. Eat less, exercise more. Spend less, save more. Words to live by.
• In the WSJ's Deal Journal, Heidi Moore makes an obvious/important point: The feds' backstop reflects the very premise of the GSE.
• And on the topic of federal intervention in general, David Gaffen has assembled a handy chart of such efforts over the last several months.
• And more on the Fed/Treasury announcement concerning Freddie and Fannie, from Real Time Economics' usual cast of economists.
• As we noted back in November, bear markets can happen during a rate-cutting cycle. Barry Ritholtz makes a similar observation today: Fade the Fed!

Friday Reading

Special Friday bailout edition--floodwaters here in Wisconsin, Fannie and Freddie in Washington...

• CNBC's Melissa Lee introduced this morning's University of Michigan numbers as "better than expected." Perhaps, but given the absolute level of consumer sentiment, "better than expected" is pretty thin gruel.
• Bloomberg's Caroline Baum seems a bit frustrated that policymakers have put taxpayers on the hook in the midst of the housing/credit meltdown. But The Washington Post's Steve Pearlstein makes a perfectly sensible point: "A financial crisis is not a morality play. What matters most isn't the precedents that are set, the amount of taxpayer money that's implicated or whether people are made to suffer fully for their financial misjudgments. In the end, what matters most is that we get through it as quickly as possible with an economy and a financial system intact." Our only amendment would be that getting through it "quickly" really isn't the point. It's the intact part that matters most.
• Yves Smith wonders if the way out of all this is through a Japan-style "lost decade."
• Barry Ritholtz notices a not-so-surprising fact: The companies that are brought low by "rumor-mongers" and short-sellers tend to have pretty substantial problems.
• Here's a very interesting think piece on the future of the suburbs from Reuters' Helen Chernikoff.

Wednesday Reading

Mid-week restoration-of-order (commodity-driven stocks higher, broad market lower...for now!) edition:

• Hedge-fund-apalooza: It was a tough first half for the hedgies...and fewer new funds are launching in this environment...but the survivors are hiring.
• We haven't understood the enthusiasm for technology shares for...well, for a very long time (with the exception of Apple on a couple occasions). But where in the wide, wide world did the idea that techs would be insulated from the broader economic downturn come from?
• It's been a debate-through-the-looking-glass for a few months now, but Caroline Baum is right: It's a recession.
• Floyd Norris makes an important point about housing inventories: They're falling very, very slowly.
• Stephen Rosenberg notes that "state pension plans aren't necessarily the best place to put private sector 401(k) money." Read between the lines for an interesting riff on the chord known as "unintended consequences."

Monday Reading

Special intraday whiplash edition...

• Potentially useful contrarian headline from the mainstream media: "Pension Funds Boosted By Oil."
• Interestingly different take on retirement funds' big picture: "Pension plan suffer huge losses."
• Chuck Jaffe on the issue of some mutual fund managers playing with other people's money...but not their own.
• Via Abnormal Returns, the FT's Wolfgang Munchau makes the desperately important point that "a recession is not the worst possible outcome. The worst is for this crisis to go on and on, for Minsky's moment to become an eternity."
• Barron's: "The Bear's Back." As Mark Haynes noted on CNBC this morning, the bear market didn't just begin. It began at the October highs and has been developing, in fits and starts, ever since.

Thursday Miscellany

Short day here. A very happy 4th to one and all...

• If you care about defined-contribution retirement plans, take a few minutes to read Scott Simon's summary of recent congressional action on fee disclosure.
• Two great (as in revealing, not encouraging) stories on the nature and consequences of California's real estate meltdown, both via Calculated Risk: "How Lehman Lost Its Way" and "Ghost Towns in the Inland Empire."
• On this morning's employment report: Barry Ritholtz and a collection of economists' reactions from Real Time Economics.
• Yves Smith has an interesting think piece on the various boxes in which the world's central bankers find themselves.
• At Capital Spectator, Jim Picerno notes that even when the red numbers get truly painful, an inexpensive, fully-diversified portfolio of global asset classes is a pretty good way to go for most long-term investors.