Market Talk

- Don’t dismiss the notion that retail spending is being partly driven by homeowners strategically defaulting on mortgages, even though it’s hard to quantify exactly hoe many people are “spending the mortgage,” Paul Jackson writes at HousingWire.

- Small businesses, which have led job creation in previous recoveries, may be finally contributing to job growth now as the economy rebounds, Atlanta Fed’s macroblog says.

- “The Squid has been living for years off the simple fact that, like the fabled IBM of yore, no-one ever got fired (or sued) for picking Goldman Sachs,” the Epicurean Dealmaker notes. “That calculus has been changed,” and everyone knows it.

- Google’s (GOOG) recent acquisition of secretive early-stage start-up Agnilux ranks as the “most curious” deal in its history, Digital Daily blogger John Paczkowski says.

- Picking apart Apple’s (AAPL) blowout earnings, Silicon Alley Insider’s Dan Frommer says Apple’s iPhone business is growing much faster internationally than it is in the US.

- Lots of merger chatter swirling swirling around UAL Corp’s (UAUA) United Airlines. And while a deal might make sense for operational reasons, Footnoted’s Theo Francis notes the company has made it “substantially more attractive” for its top executives to seal a deal.

- Facebook’s launching an ambitious plan to essentially take over the Internet.

- Looks like Adobe (ADBE has finally given up on getting Flash on the iPhone. “We will still be shipping the ability to target the iPhone and iPad in Flash CS5,” Mike Chambers, Adobe’s principal product manager for the Flash platform, writes on his blog. “However, we are currently not planning any additional investments in that feature.”

- Investors take note: A stock-market indicator with a good long-term record has flashed a buy signal.

- The grudge match over your 401(k)

- Is the economy ready to walk without the Fed’s MBS crutch? It’s possible, but keep in mind the Fed’s made it clear it’ll resume the purchase program if trouble ensues, John Curran says. “I doubt that a declining stock market alone would be trouble enough to trigger a restart of the program but a sinking economy certainly would.”

- The most important thing FCC’s National Broadband Plan should accomplish is increasing amount of wireless spectrum available for broadband Internet, writes Fred Wilson. “The fact is that wires, fiber, and cable aren’t going to get us where we need to go.”

- It seems homeowners are increasingly opting for strategic
defaults. At least that’s the sense from recent NY Times and LA Times stories, Calculated Risk says. “I’m not sure if walking away is becoming more common or if there is a bubble in walking away articles.”

- Palm’s situation is turning from bad to worse, as its 4Q may not be any better than its ugly 3Q, John Paczkowski notes.

- Number of single-family homes under construction has fallen off a cliff since the housing bubble burst. About 1 million were under construction in February 2006; today there are just 300,000. “The precipitous decline ended last summer, and housing construction has been essentially flat for several months,” Donald Marron says. “Perhaps housing construction has finally found bottom?”

- Our DJ colleague Brendan Conway wonders whether the party’s over for financial stocks.

- Sen. Dodd’s financial regulation bill is “tougher and better than I had expected,” Edmund Andrews writes on the Capital Gains and Games blog. “The big banks and Wall Street firms are already howling in protest. Front groups like the US Chamber of Commerce, which claim to be looking out for mom-and-pop businesses, are throwing everything they have at it.”

- PPI falls 0.6% in February, marking biggest drop in seven months and curbing inflation expectations, for now. Gasoline costs declined sharply.

- Fed’s faced its fair share of scrutiny for underestimating the financial crisis, but simply calling for change doesn’t mean much. “Let’s be practical. What other institution did a better job?” James Hamilton ponders. “Where in Washington today do you see an agency with the intellectual resources to get this right? Simply squawking that we need a change is not constructive leadership; it’s political finger-pointing.”

- Starbucks (SBUX) appears to be testing blueberry waffles in some markets, Starbucks Gossip blog reports, with Denver, Oregon and an area north of Seattle trying out the toasted items. Waffles could help increase those morning sales, too, especially at a price noted by several blog commenters: $2.50 per waffle.

-It only took two weeks and a 6% pullback in the stock market, but more newsletter writers are looking for a correction than at any other time since 1984, Bespoke reports, citing data from Investors Intelligence.

- A Kauffman Foundation survey of economic bloggers found what many already expected: we share a bleak economic view. “While [bloggers] individually express themselves virtually every day, we think their collective voice needs to be heard,” says Tim Kane, senior fellow at Kauffman and author of the study.

- Time Inc says 4Q subscription revenue down 6% from year ago and ad sales dropped 12%. Not great, but better than 3Q, when the declines were worse in each category. “Requisite caveat here: These numbers…are being compared to really terrible numbers from the previous year,” Peter Kafka says. “So the fact that Time Inc can’t show actual growth tells you that this is still an industry with really big problems.”

- Strategic defaults on mortgages gaining steam. “The longer the real estate bust continues, the more deeply underwater borrowers will think hard about the costs of upholding their side of a deal,” Yves Smith notes.

- A dandy revenue comeback? Not quite. Year-over-year revenue growth “leaves much to be desired,” Pragmatic Capitalist says, as revenue ex financials is up just 3%. “Not exactly a barn burner in top-line growth,” blog says. “And this is in comparison to the very weak 4Q08 when the economy was nearly lifeless.”

- AOL’s 4Q ad and subscription revenue fell. “Again, recall that these numbers are against miserable comps from a year ago, when advertisers and publishers just sat in the dark with towels over their heads, crying,” Kafka notes. CEO Tim Armstrong certainly has his work cut out for him.

- ADP says only 22,000 private-sector jobs were lost in January, the smallest decline since February 2008. “The less-bad theme continues,” says Miller Tabak equity strategist Peter Boockvar.

- The “Volcker Rule” is looking more “toothless” by the day.

- US Transportation Secretary Ray LaHood says he wants to talk directly with Toyota’s CEO about vehicle-safety concerns and the company’s handling of those issues.

- AIG”s ignoring its critics and still moving forward with plans to accelerate bonuses to employees of its financial products division.