Buy! Buy! Buy! Sell! Sell! Sell! (Slate)
Tim Harford, writing in Slate, hits on a subject near to our heart, that of the rationality of sudden reversals or rapid changes in the stock market. It's also, of course, timely. Some would look at these moments as evidence of irrationality (or at least bouts of it) that are quite present in the market; certainly they don't seem to be efficient. But there's some evidence that it may be efficient for sellers (or buyers) to move in concert -- that it represents the rapid diffusion of information, including the important information of what others in the market are doing. This kind of explanation should give comfort to the EMHers, but it is it too pat? Is the Efficient Markets Hypothesis basically some sort of non-disprovable theory whose fundamental flaw is that it's too robust, that it has an answer for everything? Is the EMH a cult? Yes and yes.
More on Wal-Mart and Organics (Truth On The Market)
You always basically knews that people who insisted on eating organic foods, and showed disdain for typical agriculture, were just a bunch of cultural elitists. Fortunately, folks like Hank Paulson are finally starting to show their true colors, so such accusations aren't seen as baseless anymore. It really came to a head in the last week in response to Wal-Mart's continued makeoever (to appeal to the Target crowd), and their decision to start selling organics. The New York Times (of course) offered up their sacrificial lamb (who they knew would get savaged) to claim that Wal-Mart subverts the very idea behind organics, and that it would now be all about efficiency and cheapness, as opposed to responsibly produced, responsibly priced food. Funny, we always thought organic had something to do with not using pesticides, but perhaps that's terribly quaint of us. On the other hand, responsible prices is a totally meaningless concept, and one gets the impression that these forces would like to see most food priced out of range for most people -- then they can continue to laugh at whitebread America; it's perfect.
Blogger Hits Home By Urging Boycott Of Chinese Property (WSJ)
This guy seems to have all the making of a regular Bill O'Reilly. Zou Tao thinks that the Chinese real estate market is way overheated, and he's calling on people to boycott purchasing property. He's been gaining traction and support too, with 150,000 people pledging to him that they wouldn't buy property until prices come down. In one sense, it's a natural reaction to high (or, perhaps too high) prices. People should wait for prices to stabilize; sometimes it is dumb to spend too much in a spiking market. But these attempts at playing around with the price of something, whether it's this guy on his blog, or O'Reilly and has one man crusade to make gas for affordable, is really silly. If anything, they're only building pent-up demand. A smart investor would be buying now, waiting to sell to these people once they eventually capitulate to the market. That being said, if the stock market continues its drop, we promise to do our best to will it in the other direction. We'll start collecting "no selling" pledges from our readers with a commitment not to sell until the market jumps 10%, at which point we can start the sell-off cycle once again.
Enquiring minds want to IPO? (CNN Money)
For those who subscribe to the theory that there's a bubble in celebrity (as evidence, the large number of celebrities who, um, don't have any fans), nothing would make for a better indicator of the top than an IPO of American Media, the company behind Star and the National Enquirer. The proliferation of these magazines on racks with their redundant (another red flag) stories, pictures and juice-less gossip is one of the most telltalle signs of the bubble. Whereas once celebrities held a valuable economic function, more and more it just seems like an industry supporting a lot of worthless weight. At the moment, there's no official plan for an American Media IPO, but some are stoking the flames of speculation. Please, just let it be -- and quick.
Arcelor formally rejects Mittal bid, but ready to consider an improved offer (AFX)
There's a lot of mixed news coming out on the last twist in the Arcelor/MIttal love story. It appears that once again, Arcelor has indicated it's just not ready to settle down at this point, and that it wants to see what like with the younger, wilder Severstal is like, before hitching up with the more mature Mittal. As with every other incident so far, it seems useless to pay too much attention to any one event or final conclusion, as there will undoubtedly be more.
Correcting the Record about Microsoft (Scobleizer)
Here's evidence that your view of business is drastically different than that of many on the other coast. You'd notice if Microsoft lost a big player, like if Ballmer were pushed out or if Gates resigned from the board. It'd be big news, and the press would be all over it. In other circles there's been a loss almost as dramatic at Microsoft, which will never across most people's radar. Robert Scoble was Microsoft's blogging evangelist, turning the company into a friendly, transparent, 2.0-approved enterprise, all via his blog Scobleizer. Despite his undying love for the company (well, his supposed love for the company) he announced he's leaving for a small Silicon Vallley startup. The noise on this one is deafening. Literally hundreds of blogs are treating this as bigger news than if Ballmer had left. Somehow we're not expecting much of a Carly effect after this departure.
Deutsche Boerse to reconsider Euronext bid over next few days (AFX)
We knew that the NYSE/Euronext story probably wasn't over -- it never is with the stock exchanges. Reports are suggesting that the Deutsche Boerse, which has already seen its overtures rejected once, is mulling another bid for Euronext. That would dash our hopes of having an inter-continental exchange, though for the sake of good copy, we'd like to see these stories go on as long as possible.
Copper Leads Metal Declines as Rate Rises Dampen Growth Outlook (Bloomberg)
There seem to be two ways to lower the price of commodities. First, there's the economic innovation way -- the long term way -- which seeks to make commdoties intrinsically less valuable by improving efficiency and reducing the need for them. Then there's the brute force approach, which may be in effect now. Central banks across the world are all tightening the purse strings, making lending more expensive, and thus making it harder to invest in big capital intensive projects. In other words, you can slow growth, and that'll reduce demand. Since raw materials have started their bull run, there've been many head fakes, but perhaps this one is real, as it coincides with a dramatic change in economic confidence.
Get Ready For $100 Oil and $1,600 Gold (Forbes)
Just as the metals market seems to be relenting, newsletter writer Curtis Hesler tries to rally the troops. Don't sell now! Commodity bull markets last for 20 years! China's consumer population is going to double and be twice as big as the US'. Stocks are risky, tangible assets are where it's at. Commodity bull markets always make all-time highs. In other words, don't abandon ship, and buy the newsletter.