Market Talk

Newswires Max Murphy writes:

Sirius XM (SIRI), hoping it has Adonis DNA of its own, launches “Tiger Blood Radio” to tackle all things Charlie Sheen starting at 6:00 am EST Saturday.

Channel will discuss the latest twists in the simultaneously tragic and hilarious public meltdown of the playboy actor, and feature interviews with some of the, well, ladies who have made Sheen’s acquaintance.

No word from Howard Stern, SIRI’s most popular talent, who wanted to give Sheen an open mic on his SIRI channels. SIRI clearly can’t wait because it’s busy, “Duh, winning!”

(Photo courtesy of the Library of Congress.)

My first journalism job came at the Verona-Cedar Grove (N.J.) Times, a small, very small, weekly back in 1991. I was hired as an assistant editor with pay somewhere in the general vicinity of the minimum wage. We had a four-man editorial team, and I was the low-man on the totem pole, meaning I answered the phones, typeset copy, handled the classified ads, I even sold the newspapers at the front desk.

Hey, I was young, I needed a job, and I didn’t have a Columbia J-School degree. They also let me write and take photographs. Even then, pre-Internet, back before the business model got blown to smithereens, it wasn’t exactly a lucrative field. It wasn’t something you expected to get rich doing, or even rich enough to move out of your parent’s basement.

Of course, it was never a lucrative field. Back in the day, before bylines, before J-school, reporting was a trade like any other, and paid like a trade. The operative word in “Ink-stained wretches” is “wretches,” not “ink” or “stained.”

Here’s the honest truth about journalism, least as I see it: the only real reason to do it is because you like pissing people off. The best journalists are always the ones that really like annoying people, hitting them and hitting them and hitting them again until the real story, the big story, is out there. It takes an obsessive personality to be a good journalist. The rest are just writers.

The only thing that’s really changed about the business, too, since I started, is that you can get the news free online now. This is and has always been a rough business. Most journalists give up at some point; don’t get me wrong, talent matters, but getting ahead in many ways is merely a war of attrition. You wait for the guy ahead of you to give up and go into PR. Then you’re the guy ahead of you, and you go into PR. The good ones stay because they’re total news junkies — junkie is a very apt description, honestly — and the bad ones stay because they can’t figure out anything else to do.

Anyhow, enjoy the cartoon. Prospective journalists, beware: It’s actually worse than these cuddly bears make it out to be.

- Hewlett-Packard’s (HPQ) suit against former CEO Mark Hurd looks “very much like it was filed in a fit of passion after hearing that Hurd had signed on with Oracle,” Reuters blogger Felix Salmon says. “There’s no tactical or strategic rationale for this: it’s just petulance, really.”

- “Hurd’s knowledge of H-P’s server and data storage-systems business will undoubtedly come in handy at Oracle, which has been aggressively moving into that very space ever since its acquisition of Sun,” Digital Daily blogger John Paczkowski says. “In that sense, Hurd’s hiring is a real coup for Oracle. Who better to put the screws to a rival than a former CEO with a bone to pick?”

- There are currently 161 potential IPOs on file that are hoping to raise $56B. Staggering numbers but, as Josh Brown points out at The Reformed Broker, not necessarily as great as they appear. “Between LBO retreads and the previously bankrupt, it remains difficult to get excited about the initial public offering dealflow, robust as the pipeline seems to be in dollar terms on the surface.”

- Former OMB Director Peter Orszag makes his debut as a columnist for the New York Times by advocating an extension of the Bush-era tax cuts for two years for the middle class, and even for the upper class if that’s what’s needed to get a bill through Congress. “Higher taxes now would crimp consumer spending, further depressing the already inadequate demand.”

- The labor force had little to celebrate this Labor Day, Robert Reich says. Organized labor is down, and non-organzed labor is facing joblessness and underemployment. “Face it: The national economy isn’t escaping the gravitational pull of the Great Recession.”

- If the market has been overly bearish lately, paving the way for relief rallies and such, it’s not really showing. John Hussman notes the VIX, which remains in relatively placid territory. “It’s difficult to look at the evidence and conclude that investors are excessively bearish, much less terrified here.”

- FCIC hearings revealed how reliant Lehman was on daily, short-term funding to cover longer-term costs. “It was a recipe for disaster, a trailer park in search of a tornado,” Barry Ritholtz writes at The Big Picture.

- “The truth is that the trouble in housing is not, for the most part, a demand-side issue,” Ryan Avent writes. “The problem is the millions of homeowners stuck in houses they can’t afford to sell. These households represent a significant shadow supply of foreclosures-in-waiting. I agree that it would be silly for the administration to try to support housing prices by offering more goodies to potential homebuyers. But it doesn’t follow that letting prices go their own way will magically get housing markets moving again.”

- “Newspaper advertising revenues are on track this year to dive to a 25-year low of approximately $26.5 billion, or 47% of the record $49.4 billon in sales achieved by the industry as recently as 2005,” Alan Mutter notes.

- What’s up with Google’s logo today?

- If Google (GOOG) can grow revenue, why can’t Yahoo (YHOO)? That’s the question Eric Savitz poses at Barron’s Tech Trader Daily blog. “[Yahoo CEO Carol] Bartz inspires confidence, she’s big on taking decisive action, but for all her efforts, the company still isn’t growing,” he says. “At some point, Yahoo is going to need a more clearly defined growth strategy — and it will have to execute on it.” Yahoo shares drop 8.5%.

- Google issues a 20-page response to FTC’s staff discussion draft about the future of journalism in the digital age. Main takeaway: Don’t blame Google for the newspaper industry’s troubles. “The large profit margins newspapers enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers,” Google says. (Hat tip, Jeff Jarvis.)

- Any worries that the iPad would hurt Mac sales were put to bed in Apple’s (AAPL) 3Q results. Apple set a quarterly record by selling 3.47M Macs in 3Q, a 33% increase from a year ago. “If the iPad is having any effect on Mac sales, it’s an additive one,” Digital Daily blogger John Paczkowski says. “Like the iPod once did, the new slate from Apple seems to be having a halo effect on Mac sales thanks to the publicity and Apple Store floor traffic it has generated.”

- Just how impressive were Apple’s quarterly results? Look no further than the 3.27M iPads sold during 3Q, TechCrunch says. Put into context, that’s only 200,000 fewer units than all the Macs sold. And 3Q was the best Mac sales quarter ever. “In other words, in just about any other quarter, the iPad would have outsold the Mac,” TechCrunch says, while expecting the iPad to blow past Mac sales next quarter.

- Bulls once again get rejected trying to rally S&P 500 significantly above its 50-day moving average. Bespoke Investment Group reports this is the fourth separate time since the “flash crash” in early May that the index has turned back at its 50-day moving average. “Bulls had been hoping that strong earnings would be the catalyst to take the S&P 500 to the other side of its 50-day, but so far the bears (and Bernanke) are having none of it.”

- Yesterday’s trading showed “the high-frequency-trading nerds were in full swing, but to the upside this time,” Doug Kass writes. “I have written that few complain when the algorithms take the market up (like yesterday). But I would prefer to be intellectually honest, even when the programs take the market up, and I will not stop writing about this subject until the SEC acts responsibly and curbs certain high-frequency-trading strategies.”

- The housing market is stumbling, once again. “In major markets across the country, home sales are deteriorating, inventories of unsold homes are piling up and builders are scaling back construction plans,” WSJ says.

- “Returning to a sensible, fundamentals-based housing market is painful, but ultimately, it’s something we’re going to have to do, one way or another,” Barbara Kiviat writes at Time’s Curious Capitalist blog.

- A stumbling housing market offers clear evidence that the housing tax credit was a “clear and unequivocal failure,” Bill McBride writes at Calculated Risk. “Not only did most of the benefit go to people who were going to buy anyway, but the credit didn’t reduce the overall supply,” he says. Ultimately, the tax credit merely pulled demand forward. “This is a textbook example of bad policy.”

- “At just 12 times prospective earnings and with prodigious cash flow enabling it simultaneously to keep up its pace of small acquisitions while still repurchasing shares, the market may soon realize that its diagnosis of J&J was overly dire,” Lex says.

- Are Goldman shares worth a flier at current levels? James Stewart weighs in.

Yessir, volume's up a lot...on some stuff.

CSX’s 2Q earnings were solid, helped by strong volume growth in hauls of metals and automotive-related freight. Automotive volume up 63%, while metals up 44%. That’s the good news.

In all other merchandise areas — chemicals, phosphates & fertilizers, emerging markets, agriculture products, forest products and food & consumer, volume growth vs last year’s 2Q was 10% or less.

In terms of what they indicate about economic growth, agriculture, forest products and food & consumer are disappointing, with volume growth of 1%, 2% and flat vs last year’s depressed levels.

“Increased shipments of ethanol were mostly offset by weaker demand for feed ingredients, soybeans and other processed products,” CSX commented on ag products. On forest products, the railroad noted volume growth related to building products increasing from “depressed levels of 2009,” due to home-buyer tax incentives “that ended during the quarter.” Also, paper products “continued to see long-term, gradual volume declines,” likely due to folks reading more news online instead of in newspapers, CSX suggested.

Continue reading…

- Several big name hedge-fund managers are placing bullish bets on Citi (C) and Bank of America (BAC). “Paulson, Soros, Falcone, Tepper, Ackman, Ainslie, Loeb — you name it, they own one or the other…or both,” Joshua Brown writes at The Reformed Broker. “And they own them in size.” But why the sudden interest?

- Goldman Sachs (GS) may be on the verge of resolving SEC’s fraud charge by agreeing to a settlement worth hundreds of millions of dollars, according to FT. But FusionIQ CEO Barry Ritholtz is still perplexed why GS chose to fight this charge in the first place. “Even if GS were to prevail in court, they have already lost. The reputational damage is already measured in billions of dollars, and will last years if not decades.”

- Furious decline in newspaper ad sales eased in 1Q, but struggling industry still isn’t showing signs of rebounding. “The less-awful sales in the first months of this year gave publishers the gift of a bit more time to fundamentally reposition their businesses,” Newsosaur blogger Alan Mutter says. “But there is nothing in the first-quarter numbers to suggest that the storm for newspapers has blown over.”

- S&P 500 has averaged a 0.12% gain on the Friday before Memorial Day since 1971, with positive returns coming 59% of the time, Bespoke Investment Group reports. But the performance hasn’t been so hot recently, with the index averaging a 0.28% decline throughout the last 10 years, firm notes. And the measure has dropped more than 1% on three instances in last decade.

- Warren Buffett’s testimony next week before FCIC is subpoena-driven, writes Fortune senior editor-at-large Carol Loomis, a pal of the Berkshire Hathaway (BRKA BRKB) chairman.

- FASB publishes proposal that would overhaul how companies value many assets and liabilities they hold. “Tremble US financial institutions, for FASB is about to fair value your assets,” FT’s Alphaville says.

- There are still calls for more (yes, more) government spending. “The long-term deficit needs attention, but right now it’s critical for government to spend,” says former labor secretary Robert Reich. “Otherwise we have no hope of getting free of the gravitational pull of this recession.”

- If enough tech giants go after a market, will it eventually catch on? Just a week after Google unveiled details of Google TV, Engadget reports Apple (AAPL) will take another crack at its three-year-old Apple TV product. But as MarketWatch’s John Dvorak pointed out in a column last week, it may be a hard slog, even for the biggest of behemoths.

- “The Great Recession is over, and the Great Transition is here,” James Picerno writes. In theory, distinguishing between the two is a piece of cake. In practice, reading the tea leaves is going to get complicated at times.”

- The Apple faithful struggle figuring out the best way to carry around the iPad. Aw, poor fanboys, such a conundrum – what are they gonna do??

- It’s debatable whether technicals or valuation are driving stocks higher, but “excessively bullish sentiment is the biggest risk right now,” Barry Ritholtz writes at The Big Picture.

- The ratings agencies’ flaws need to be addressed. “Perhaps the recent attention to the role the ratings agencies played in the crisis will change that, but I’m certainly not counting on it,” Mark Thoma says on his blog.

- It’s hard to see how Palm considering licensing its WebOS platform to other hardware makers could ultimately be successful, especially as Google’s (GOOG) Android popularity rises, Dan Frommer writes at Silicon Alley Insider. “While licensing WebOS might make a sexy story to tell potential acquirers or Wall Street, it’s not going to save Palm.”

- Can’t be too defensive, right? “I do recognize that my credibility in sounding a cautious note would presently be stronger if I had ignored further credit risks and captured some of the past year’s gains,” John Hussman says. “But the awful outcome of this same set of conditions, which we also observed in 2007, should provide enough credibility.”

- Newspaper circulations keep declining, as average weekday sales have dropped almost 9% since last year, NYT’s Media Decoder writes, citing data from the Audit Bureau of Circulations. “The reality facing American newspaper publishers continues to look stark.”

- “It’s ironic how the ‘Goldman was so smart to have shorted subprime’ meme is now being turned on its head…as Goldman’s conduct in the run-up to the crisis is being re-examined in a new light, Yves Smith writes at naked capitalism.

- Felix Salmon details the continuing Goldman wars.

- Whirpool (WHR) shares soared after its blowout 1Q report. “I continue to think that the panic a year ago was greatly overdone, as individuals and companies cut costs wherever they could, while waiting to find out if forecasts of Great Depression II were going to be borne out,” NYT’s Floyd Norris says. “But now the spending — and the hiring — is coming from people and companies that overreacted in the panic.”

- Google’s (GOOG) decision to scrap plans to sell Nexus One through Verizon Wireless seems a bit curious.

- The current bull market has now gone 400 days without a 10% correction, Chad Brand notes.

- Google (GOOG) dumped from China Unicom’s (CHU) Android devices. “An obvious and, I suppose, inevitable response to Google’s recent defiance of the Chinese government,” John Paczkowski says. “I imagine we’ll be hearing of a similar move by China Mobile in the near future.”

- “The mortgage mods and foreclosure abatement programs are really all about propping up insolvent banking institutions,” Barry Ritholtz writes. “These programs are another losing round of helping Wall Street at the expense of Main Street. It is the worst kind of trickle down economics that has been seen in decades.”

- Bernanke says record-low interest rates still needed to support the economy, but the central bank has to be ready to tighten credit when needed to prevent inflation. His comments helped propel stocks higher. Then ECB President Jean-Claude Trichet said IMF help for debt-strapped Greece would be bad, really bad, which helped push stocks way off the fresh highs they set earlier in the session.

- If you thought 2009 was bad for newspapers, 2010 may be even worse, Newsosaur blogger Alan Mutter says. “If the rate of decay continues to slow in 2010, the industry will shrink at a slower pace than it did last year. But it still will continue to shrink. And declining shrinkage should not be taken as a sign of health.”

- Venture-backed IPOs might be making a comeback. Four non-biotech venture-backed deals have occurred this year, and all have performed fairly well, Paul Kedrosky notes. “Admittedly, four data points aren’t yet much of a trend, but it’s worth pointing we are seeing the beginnings of a resurgence in the venture-backed IPO market in 2010.”

- It may be a lost decade for some buy-and-hold investors, but keep in mind “some investing rules never go out of style,” Tom Petruno writes. “Try to buy good businesses, try to get them when they’re relatively cheap, and don’t underestimate the power of dividend income over time. And the cardinal rule: Stay well-diversified.”

- Tepid revenue growth won’t placate market much longer. “If we don’t start seeing a pick-up in top-line growth this market is not going to be celebrating for long and the recent optimism in stocks will be proven wrong,” Pragmatic Capitalist says.

- Once again, another weak Treasury auction today. Hard to pinpoint exactly what’s causing it, “but something has changed this week in the US Treasury market and the cost of borrowing is going up as it is in Europe too,” Peter Boocvkar says.

- The Dow Jones Internet Index, which last got any press back when pets.com was still around, surpassed its pre-Lehman levels last summer, and is marching higher and now making a run at its highs from 2007, Bespoke notes.

- AAII’s sentiment survey shows percentage of respondents who expect the market to rise has dropped two weeks in a row, even as stocks keep setting fresh highs. “This is not typical,” Jason Goepfert writes.

- Retail stocks have been some big beneficiaries of this yearlong bull market. Bespoke Investment Group finds more than half of the 31 S&P 500 retail stocks trade within 2.5% of their 52-week highs. Only four of those 31 trade below their 50-day moving averages and six are down this year. Macy’s (M) up the most year to date.

- Money market funds yielding virtually zero create a dangerous situation where people tend to chase yields elsewhere, with the stock market being a big beneficiary of that, writes Fred Wilson. “Find an acceptable place to put your money for a year or two at a low, but positive, yield. And then wait for rates to rise. Because they will and you don’t want to be in the wrong place when that happens.”

- “Reasonable reform has almost no chance of passing the Senate,” Simon Johnson notes. “But a well-crafted debate, drawn up on the right terms — and with the support of the president (although don’t hold your breath on that) — could really help shift popular understanding of the issues.”

- Apple (AAPL) got a lot of press last week for its market cap surpassing $200 billion and exceeding Wal-Mart’s (WMT) value. “I always snicker when I start hearing [these] stories,” Paul Kedrosky says. “When we press our noses against the market glass and ‘oooh’ and ‘aaah’ at a company’s market capitalization exceeding something it shouldn’t…let’s just say bad things tend to happen. Eventually.”

- “The trouble is that speculation is to financial markets what claptrap is to the political system: absolutely crucial,” Paul Murphy writes at FT’s Alphaville blog. “Speculators, faceless or otherwise, make markets more efficient by providing the liquidity which makes trades possible and, ultimately, produce more accurate prices…How is it that our political elite does not know this?”

- Most online readers still aren’t ready to climb pay walls, according to Pew Research. “It also does not give me comfort that we’re wasting previous time futzing over walls when we should be paying attention to the big problems we have…dreadful engagement and loyalty,” BuzzMachine blogger Jeff Jarvis says.

- Yahoo’s (YHOO) Senior VP of US revenue and market development, Joanne Bradford, is planning to leave the company and become chief revenue officer of online startup Demand Media, Kara Swisher reports. Departure marks a big step for Demand and a “definite blow” to YHOO CEO Carol Bartz’s turnaround efforts.

- Atlanta Fed looks at the discrepancy between the income and expenditure sides of GDP calculations in the past couple of years.

- In a blog post, Google looks back at how it brought its technologies and DoubleClick together over the past two years and its plans for online display advertising in the future.

- Check out who WSJ predicts will win the National Championship.

- Potential candidates for Fed Board vacancies should be known to have anticipated the financial crisis in advance, have a pro-consumer stance and be willing to release AIG-related emails, Yves Smith says.

- In the next year or so, if we are to have a sustained recovery, I think we would be much better off with stingy banks, than with thrifty consumers,” Stephen Gandel writes.

- The notion that newspaper publishers should torch their print editions and just embrace the Web is “just plain nutty,” Newsosaur blogger Alan Mutter says. “It doesn’t take a certifiable Silicon Valley genius to see that no business can walk away from some 90% of its revenue base without imploding.”

- Jobless claims have been stuck at current levels for nearly four months, Economist’s Free Exchange blog notes. “The wait for the dip back to normal levels continues.”

- Google and retailers are teaming up to help customers find products.

- Consumer credit has contracted about 6% since the recession began, and banks’ lending standards are getting even tougher. “It will be interesting to see to what extent the tightening of standards for revolving credit impact overall lending,” writes Atlanta Fed’s Ellyn Terry.

- Latest AAII weekly poll shows surging bullish reading of 45.3%. “This has served as a fairly reliable contrarian indicator in the past as small investors tend to pile into stocks near the end of rallies,” Pragmatic Capitalist says.

- Is a housing bubble developing in China? Calculated Risk weighs in.

- Peter Boone and Simon Johnson say beware of the coming Greek debt bubble. Paul Krugman isn’t so sure.

- Sen. Chris Dodd will introduce his sweeping plan to overhaul financial regulations on Monday without any Republican support.