Market Talk

- Distressed home sales accounted for 29% of all homes sold in January, the highest level since April 2009. “This is not a good sign,” Barbara Kiviat says. “There’s long been a worry that after last year’s various foreclosure moratoria lifted, we’d see a fresh surge of trouble in the housing market. The latest figures on distressed sales…lend some weight to that argument.”

- Looks like the music industry’s digital sales boom may be over, Peter Kafka notes. Last quarter marked first-time ever that the number of digital songs sold in US decline.

- CNBC commentator Larry Kudlow argues a 5%-10% pay cut for federal employees could have a major impact on the federal budget deficit. But the Times’ Paul Krugman says those pay cuts would be “trivial” at best, and Kudlow’s picture is a fiscal fantasy.

- Spiking Greek bond spreads aren’t affecting over debt-ridden European nations. “That would appear to indicate that markets are not too concerned with the prospects of the Greek end-game leading to some sort of European contagion, which is the most dangerous risk of the Greek crisis,” Economist’s Free Exchange blog writes.

- February wholesale inventories rise for second consecutive month. If next week’s report on business inventories also rises, “it will confirm that we may be seeing the beginning of some inventory stocking after the slowing rate of destocking over the past six months,” notes Miller Tabak’s Peter Boockvar.

- Goldman Sachs (GS) has hired ex-New York Timesman Stephen
Labaton, who until December covered business from Washington, Politico.com reports, suggesting the bank’s aiming to counter its dreadful PR and help navigate the DC regulatory sphere.

- The war between Apple (AAPL) and Adobe (ADBE) is heating up.

- The American economy appears to be in a cyclical recovery that is gaining strength. Firms have begun to hire and consumer spending seems to be accelerating,” Floyd Norris writes. “That is what usually happens after particularly sharp recessions, so it is surprising that many commentators, whether economists or politicians, seem to doubt that such a thing could possibly be happening.”

- But it’s tough to cheer the economy when 15 million people are unemployed, Free Exchange says. “The state of the labor market is a real worry, and the effect of the drag from high levels of long-term unemployment is difficult to predict. Now is no time to declare victory and take a vacation.”

- FusionIQ CEO Barry Ritholtz toes the line between optimistic and pessimistic. Employment and consumer spending still have a long way to go before each returns to pre-recession levels. But as data continues to “impress,” investors would be wise not to fight the tape, he argues.

- If Greece gets fixed, who’s next in line? “The hazard here is that countries, seeing the Greek precedent, refuse to take tough fiscal steps unless the path is sweetened by Germany and France,” Reuters blogger Felix Salmon says. “This isn’t the end of the euro crisis: it’s only the beginning.”

- New York Times posts decent quarterly results, at least by newspaper standards. MediaMemo blogger Peter Kafka gathers commentary from the earnings call about ad sales and pay walls.

- US trade gap widens more than expected. “Overall trade continues to increase, although both imports and exports are still below the pre-financial crisis levels,” Calculated Risk says.

- California’s debt problems makes PIIGs look miniature. “Perhaps the solution to California’s woes is for Arnold Schwarzenegger (who is from Austria) to join the EU,” Barry Ritholtz writes. “Then, they might qualify for a bailout from Germany.”

- Google says it’ll begin selling ultra-fast Internet access to consumers, a test that could threaten telecom companies’ grip and demonstrate new uses of the Web, WSJ says.

- Looking for robust growth in consumer spending? Last Friday’s report on consumer credit should give you pause, Atlanta Fed’s Macroblog says.

- Google Buzz proves exactly why Google originally wanted Yelp so badly, according to The Big Money.

- Footnoted plans to expand post-Morningstar deal.

- Populist outrage “will persist until economic conditions improve, labor markets in particular, and there is some sense that justice has prevailed,” Mark Thoma says.

- Coupons are back in fashion, which certainly says a lot about this economic recovery.

- Northeast was pounded by a blizzard that halted transportation, knocked out power, collapsed roofs and brought the federal government to a virtual standstill, WSJ reports.

- Score one for Volcker. The fact that Obama named his bank-regulation plan the “Volcker Rule” is a major victory for the former Fed chairman, former IMF chief economist Simon Johnson says.

- Yves Smith says plans to limit prop trading “sounds well and good,” but she’s also skeptical. “Given how derivatives reform was gutted and health care reform was botched, what do you think the odds are that something with teeth will be voted in?”

- Seems a bit odd NY Times will wait a year before implementing its metered pay system, but MediaMemo blogger Peter Kafka reminds that building pay walls involves some work.

- Of course just because NYT models its pay wall after the FT’s doesn’t mean it’s going to be successful. FT’s coverage is more unique and specialized than New York Times and folks subscribing to business-oriented sites are more likely to expense their bills, Newsosaur blogger Alan Mutter says.

- Check out one of the latest additions to the blogosphere and twitterati. You may have heard of him.

- Goldman Sachs’s (GS) compensation ratio for 2009 dropped to an all-time low of 36% of revenue. That compares to 62% for Morgan Stanley (MS). But Reuters blogger Felix Salmon wonders if Goldman’s lower comp is sustainable or just a on-off.

- Two ways to view today’s unexpected rise in jobless claims: economy’s prepped for a fresh round of trouble or the recovery will take longer than expected and “deliver subpar performance for an unusually long time,” James Picerno writes at The Capital Spectator.

- Amazon (AMZN) wants to have an app for that, too. It plans to open the Kindle up for developers to make “active content,” That likely means apps, although Digital Daily blogger John Paczkowski notes Amazon refrained from using that word in its press release.

- Regional banks traded higher while the banking giants plummeted. “Wall Street clearly sees the smaller players as winners if Obama succeeds in reining in the titans,” Tom Petruno writes at LA Times’ Money & Co. blog.

- Apple (AAPL) sees new money in old media. CEO Steve Jobs is betting the tabled can reshape textbooks, newspapers and TV much the way his iPod revamped the music industry.

NY Times (NYT) already failed once trying to charge for online content. Now it looks like it’s going to try the same mistake again.

NY Observer has the details, but the Times is essentially considering two strategies: one is similar to the Financial Times in which a certain amount of content is free and everything after that limit requires a paid subscription. The second option leaves Web content free, but paid “members” are given access to merchandise, Times events and other goodies. From the Observer:

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Will Obama's tough stance on Detroit hold true?

The Obama administration came across as “appropriately stern and commanding” yesterday when discussing the fates of GM and Chrysler, certainly a contrast from its approach to fixing the banking sector, The Economist’s Free Exchange blog says.

But the true difference between the government’s plans for the automakers and banks may simply lie in the messenger, blog says. It’s simple – Treasury Secretary Tim Geithner hasn’t inspired confidence, while Obama “radiates it.”

“The administration’s approach here oozes competence and toughness, eve as the government prepares to extend billions in taxpayer dollars,” blog says. “That’s a pose it has yet to strike on the banking issue, where the appearance of a tough line is more crucial, even if Mr. Obama’s economic officials have determined that actual hardball would be counterproductive.”

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