Monday, August 10, 2009

Reading links 8/9/2009

With markets going higher week after week, looks like we’re back in Wonderland.. Even Roubini is bullish!

Here are the reading links for this week:

  • The sick fight over health care: (Great read) A too-cautious Obama has let the right define the debate -- and now meaningful reform hangs in the balance. (Salon)

  • Earnings: Worst Decline In History: While this is certainly makes for a great story that we can tell and retell to the grand kids (boring them to tears), it doesn’t really mean much. We are at an extraordinary moment in economic history. One where we are clinging to the ledge by our fingernails and peering down at the precipice below. In such unorthodox times, orthodox measures such as the price earnings ratio can fool, rather than inform you. (Trader's Narrative)

  • Melting up in the Summer heat : While a lot of attention is being focused on the S&P 500's move above 1,000, most chartists are probably focused on 1,005. As shown below, the S&P 500 failed twice to rally above this level back in October and November of last year. If the index manages to meaningfully break above 1,005, there is little in the way of resistance for the next 95 S&P 500 points. (Bespoke)

  • How to Fix the Health-Care ‘Wedge’ (WSJ)

  • The Running of the Sheep: Today we get word that equity fund inflows this week have been HUGE - the largest since August 2007, shortly after which the market peaked, followed by a sickening plunge. Now that the market has run up some 46% since the last Running (away) of the Sheep, the woolly stampede as reversed direction. Will the carnage be just as bad this time? History says yes... (InvestorWalk)

  • Tudor Investment Corp says it’s a bear market rally: Tudor essentially sees the market rallying then falling, and then repeating the cycle again. We are currently in the midst of a large rally which he feels will subside and give way to a decline in markets come September of this year. Tudor cites numerous negative catalysts for the move, including slowed growth in China. However, he still thinks that the markets will end the year then on a positive note and would be a buyer on large dips purely for the trade. This is because he thinks that 2010 could be another negative year for stocks as the rallying then declining cycle plays on. Being nimble is the name of the game and letting the tape lead you is the key here. (MarketFolly)

  • Credit Suisse - Market Now At Euphoric Levels. (Zero Hedge)

  • Mark Hulbert : Four indicators to watch for when rally may be over: The bottom line? Only one of these four indicators is even close to flashing a warning signal right now, which is why Davis is bullish right now. (Marketwatch)

  • The Elusive Correction Is Upon Us: As the bears continue to wonder when stocks will swoon again, investor sentiment data is starting to line up in their favor. (Barron's)

  • CHART OF THE DAY: Shades Of 1929 (Clusterstock)

  • Do Index Funds Contribute to Mispricing? (Dimensional Funds)

  • Banks Prepping to Bring More Assets Back Home to Balance Sheets. (WSJ)

  • Have We Reached a Top? (Minyanville)

  • What does a double dip recession look like? (Credit Writedowns)

  • Too many crooks.(PDF): Why Europe is attractive,and the problem with I-banks. (Price of Everything)

  • Brace for a decade of lower Chinese growth : Over the next five years or more Chinese economic growth is going to be constrained by growth in Chinese consumption. The massive but unsustainable investment in infrastructure and new production facilities that characterises the Chinese fiscal stimulus package will not be able to change this fact. From its dizzying heights during the past two decades, the world needs to prepare itself for a decade during which, if all goes well, China grows at a still respectable but much lower rate of 5-7 per cent. If the current fiscal stimulus package retards China’s adjustment process, as many analysts argue that it does, growth rates may be much lower. (FT)

  • The (confused) economics of cash for clunkers (Curious Capitalist)

  • Stock Market History Of High Momentum Thrusts : Bullish in the longer and intermediate term. (Trader's Narrative)

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