Market Talk

- 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??

- 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.

Here’s the first linkfest of the new year, folks. Hope you enjoy, and please let us know in the comments what else you guys are reading.

- Historians and economists will remember 2009 as the year Wall Street roared back to prosperity while Main Street continued to languish, says former labor secretary Robert Reich. “If 2009 has proved anything, it’s that the bailout of Wall Street didn’t trickle down to Main Street,” he says.

- Newspaper stocks more than doubled last year, but Newsosaur blogger Alan Mutter says time will tell whether booming times are head for the batter industry, or if this is merely a dead-cat bounce.

- Financial stocks continue to lag, but don’t worry. Bespoke Investment Group says it’s better to focus on broader measures of the rally’s health rather than a specific sector.

- Stocks kick off the new year on a high note. Still, the market remains “overbought and tactically vulnerable,” Minyanville CEO Todd Harrison says. Keep an eye on the dollar, financial stocks and market breadth as “intuitive near-term tells.”

- Get ready Apple fanboys, something big is coming in the end of January. Is a tablet announcement in the offing? And will it overshadow CES?

- Corporate insiders continue to remain overly bearish on the market’s prospects.

- It’ll be tough for fixed income to top 2009′s gains.

- Mark Thoma wonders whether the Fed caused the recession?

- Taibbi’s at it again: Fannie, Freddie, and the new red and blue.

- World’s tallest skyscraper opens in Dubai. Could it mark a turning point for Dubai’s fortunes?

- Treasury extends TARP to October. Republicans aren’t pleased.

-The Wall Street casino keeps getting even more confusing. “Over the long run, the markets reveal themselves. But on any given day, nobody can see exactly what’s happening, much less explain exactly why it’s happening.”

- Meredith Whitney says the government is “out of bullets” in its battle to boost the economy.

- Apple (AAPL) shares getting a nice bump today as tablet-related rumors have returned. Prior to the open shares had dropped 8% off their 52-week high, but one analyst stressed not to worry.

- Monetary policy and commodities – notice a link?

- A different kind of double-dip risk.

- “Trying to formulate an intermediate-term opinion on a stock right now is like building a house on quicksand.”

- Contrarianism is overrated. Or is it?

- It pains me to say this, but comments from McClatchy (MCI) and NY Times (NYT) prove newspaper publishers are looking at the future through rose-colored glasses.

- Google’s (GOOG) search market share increases, Yahoo (YHOO) and Bing fall.

- Hollywood trade publication Variety becomes another publication that will start charging for Web news.

- The profits posted by the nation’s banks in the third quarter would have disappeared if they’d maintained their loan loss provisions, rather than lowering them, Annaly Capital Management says, and the fact that they are lowering them while loan losses continue to rise is a red flag. (hat tip, naked capitalism.)

- The Federal Reserve may be coming around to a notion that to most people is obvious: you can spot bubbles.

- Google starts to play ball with newspapers.

- For GM’s board, it’s all about speed now, no matter where it gets them.

- Deep thoughts: the complicated history of simple scientific facts.

- Can it be? Has the luster dulled on Goldman Sachs? Could they actually be  just another bank? Charlie Gasparino weighs in.

- Obama takes shareholder activism to a new level.

- The recession’s two years old and more than seven million jobs have been lost, and the jobs market still isn’t improving.

- Are consumers really over leveraged?

- “Smaller declines” isn’t the same as “improvement” in the context of this economic recovery, James Hamilton says.

- Tiger isn’t perfect.

How are we ever going to shove this into a Kindle?

Daily newspaper circulation continues its precipitous fall, giving the publishing industry yet another black eye.

Weekday circulation for 379 US dailies dropped 10.6% to 39.1M during the six months ended in September, according to the Audit Bureau of Circulation, a publishing industry group. The overall circulation figure hasn’t been this low since before World War II.

Nearly two-third of the country’s 25 largest publications posted circulation declines of 10% or more, highlighting the deepening trouble for the industry. The San Francisco Chronicle, Newark Star-Ledger and Dallas Morning News each lost more than 20% of their circulations, according to Editor & Publisher.

“The first double-digit circulation decline in history means only 12.9% of the US population buys a daily newspaper,” Reflections of a Newsosaur blogger Alan Mutter says. By comparison, 31% of the population bought newspapers in 1940.

Sunday circulation, which dropped by 7.5%, is now at its lowest point since 1945, “when the population was less than half the size it is today,” Mutter says.

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Hey, this print stuff ain't so bad.

Whether or not newspaper publishers should charge for online content has been a hot-button issue recently that picked up steam today in the blogosphere.

Publishers in general are struggling to build new business models and find any sources of revenue amid increasing digital media competition, slowing advertising markets and declining revenue.

New York Times (NYT), News Corp. (NWS, NWSA) and Time Warner (TWX) have all said they’re exploring various ways to implement online subscription models for their newspaper websites.

The main problem facing the newspaper industry isn’t new technology, but rather behavior, according to Big Picture blogger Barry Ritholtz. “People are used to free, they don’t think they need to pay for content,” he says.

Ultimately, both newspapers and readers will need to go through a “behavioral change” and realize charging for online content is the only way to prop up the struggling industry.

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