This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Vito Racanelli (Barron’s): The easy money has been made, November 2, 2009. The choppy action last week suggests the going gets much tougher from here. In a year in which the market has jumped far off its lows, the bull has so far talked the talk of earnings growth. It’s time to walk the walk.

• Edward Harrison (Credit Writedowns): Bullish data, recoveries, crashes and the psychology of forecasting redux, November 2, 2009. Is a double dip or crash a baseline scenario? No, not necessarily - but it is increasingly likely. So, as bullish as I believe the data are, I am more worried about a bad outcome, not less.

• Andy Kessler (The Wall Street Journal):

...

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Vito Racanelli (Barron’s): The easy money has been made, November 2, 2009. The choppy action last week suggests the going gets much tougher from here. In a year in which the market has jumped far off its lows, the bull has so far talked the talk of earnings growth. It’s time to walk the walk.

• Edward Harrison (Credit Writedowns): Bullish data, recoveries, crashes and the psychology of forecasting redux, November 2, 2009. Is a double dip or crash a baseline scenario? No, not necessarily - but it is increasingly likely. So, as bullish as I believe the data are, I am more worried about a bad outcome, not less.

• Andy Kessler (The Wall Street Journal):

...

(AP:WASHINGTON) Treasury Secretary Timothy Geithner says the economic recovery “could be a little choppy” and it’s going to take a while. Geithner told NBC’s “Meet the Press” that bringing back jobs and the confidence of investors will be the real test of recovery. He declined to say whether the recession is over, saying economists will figure that out years from now.

Recent encouraging news in the economy “shows that _ when you act with force _ you can stabilize a crisis like this,” he said in the interview that will air Sunday.

“But this is going to be a different recovery than in the past because Americans are going to have to save more. A lot of damage was caused by this crisis. It’s going to take some time for us to grow out of this. “It could be a little choppy. It could be uneven. And it’s going to take

...

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest.

• Mike Shedlock (Mish’s Global Economic Trend Analysis): Is the stock market a leading indicator?, October 12, 2009. The stock market is at best a coincident indicator, known only well after the fact. Furthermore, even as a coincident indicator, the stock market gives many false signals, making it totally useless for all practical purposes. The theory that the stock market is a reliable leading indicator is a myth easily shattered by simple observation of the facts.

• Caroline Baum (Bloomberg): Treasury bond rally fails asset-bubble test, October 13, 2009. Bubble sightings are proliferating by the day, and with interest rates near zero, it’s not hard to understand why. Easy money leads to excess credit creation, which eventually produces

...

U.S. stocks ended modestly higher Friday, wounding up a week of solid gains as investors braced for the third-quarter financial results.  Sentiments also got a boost after Federal Reserve Chairman Ben Bernanke indicated that the central bank will be ready to tighten monetary policy once the economy improves.  Bernanke’s tightening comments helped the dollar regain some lost ground.  Bond prices fell sharply. 

After a two-week selloff, fueled in part by concerns that the seven-month old rally had gotten ahead of any economic recovery, stocks got a boost last week following better-than-estimated economic numbers and Alcoa’s (NYSE:AA) surprise quarterly profit.  That helped investors set aside worries and extend the rally.  Meanwhile, White House economic adviser Lawrence Summers reiterated the Obama administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

This morning’s stock futures show markets are headed for a higher opening as the busy

...

Regulators shut down 3 more banks including Corus; total failed banks in '09 reach 92   Three more banks including Corus Bank NA, a subsidiary of Corus Bankshares (CORS), were shuttered by the U.S. regulators on Friday as the recession continues to take its toll on banks. This takes the total number of failed federally insured banks in this year to 92, compared to 25 in 2008 and 3 in 2007. Based in Chicago, the Corus Bank was a major lender to condominium, office and hotel projects. Corus is one of the largest banks to fail this year, with about $7 billion in total assets, $7 billion in deposits and 11 branches. Two other small banks were Lacey, WA-based Venture Bank, with $970 million in assets and $903 million in deposits and Woodbury, MN-based Brickwell Community Bank, with $72 million in assets and $63 million in ...

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find interesting.

• John Hussman (Hussman Funds): Conditional expectations and September seasonality, September 14, 2009. One of the arguments we’ve seen a lot lately is the idea that September and October have historically been the worst months for the stock market, coupled with rebuttals by bullish analysts along the lines that the discussion of this historical tendency by the bears makes it likely that nothing bad will happen this time. The fact is that yes, on average, the combined September-October period has historically produced slight declines for the S&P 500 whether you look back since 1870, 1900, 1940 or 1970. But the variance around that slightly negative return is large enough that it’s really misguided, in my view, to base predictions on it.

•

...

Pretend, just for a moment, that you’re President Obama. You have big spending plans – national health insurance, two wars, and a trillion dollar bailout for your friends on Wall Street. Not to mention paying for the soaring costs of Social Security and Medicare.

Unfortunately, revenues simply aren’t keeping up.

Your Treasury Secretary – accused tax-evader Timothy Geithner – tells you that the unfolding recession is starving the country’s government for tax revenue. Indeed, just as you unveiled your trillion-dollar national health plan, Tricky Timmy informed you that federal tax revenues were dropping the fastest since 1932 – at the height of the Great Depression.

What to do…cut spending? Well, Obama did challenge his cabinet in April to come up with a whopping US$100 million in budget cuts. That’s out of an estimated 2009 budget deficit exceeding US$1 trillion, perhaps more. To put that

...

In the absence of the “Words from the Wise” review while I am traveling, this post provides links to a number of thought-provoking articles I have read over the past few days that you may also find interesting.

• Paul Krugman (The New York Times): How did economists get it so wrong?, September 2, 2009. It’s hard to believe now, but not long ago economists were congratulating themselves over the success of their field. Those successes - or so they believed - were both theoretical and practical, leading to a golden era for the profession. Last year, everything came apart.

• Daniel Gross (Slate): Failure caucus, September 1, 2009. Who is rooting for the economy to tank again?

• Ralph Atkins and Norma Cohen: (Financial Times): G20 plans for stimulus exit, September 3, 2009. World leaders have set out

...

At least something good has come out of the economic crisis; it blew off the purple robes that clothed economists and exposed their naked flanks. Still, they don’t deserve the beating they’re getting in the press – with snide remarks and sarcastic comments; they deserve better. A beating with sticks!

Even Alan Greenspan admitted he had “found a flaw” in his own thinking. We will have to imagine the giggles from the back of the room – if anyone had been awake. It was as if Stalin had confessed to being rude to his mother or Bernie Madoff copped a plea for shoplifting. The mea was fine, but the culpa didn’t seem to measure up to the facts. He, more than any living human being, was responsible for the biggest financial debacle in history; you’d hope he’d be a gentleman about it and hang himself.

Meanwhile, the queen of England visited

...