The Black Box

[Chris McConnel]

note: a couple of articles this week on VOIP


Paul Kedrosky
Weekend Reading: Building on the Thanksgiving Effect
By Paul Kedrosky
RealMoney.com Contributor

11/28/2004 1:07 PM EST
URL: http://www.thestreet.com/p/rmoney/paulkedrosky/10196264.html


News Analysis

• The U.S. dollar has become a trader fixation.
• On Tuesday we get the Chicago PMI. On Thursday see weekly jobless claims, factory orders and durable goods.
• Vasco Data Security gained 40% on earnings and an upgrade.


Good Sunday morning (and Happy Thanksgiving). Here are some articles and papers worth reading. First, however, a look at the week that just finished, and a look forward at the week ahead.

Call it the Thanksgiving Effect. The markets basically reversed course last week, regaining almost exactly the ground lost the preceding week. The Dow and Nasdaq were up 0.6% and 1.5%, respectively, while the S&P 500 gained 1.1%. (Click here for the market's action.)

Why the cheeriness? Just because, or so it seems. After all, while the economic data was decent, the market's wandering eye has moved on from its prior preoccupation with jobs and the like. Improvement on that front doesn't get the market much. Instead, oil is front and center, and it had a crummy week. Worse yet (or better yet, if you're a tireless bear), the ever-declining U.S. dollar has newly become a trader fixation. The dollar has hit record lows against the euro, and even the lowly Canadian dollar is on the ascent against its U.S. counterpart, having breached levels last seen when the current U.S. president's father was in the White House. That decline looks set to continue, and there is chatter this weekend that the Asian banks who had been the main supporters of the dollar have finally decided to go cold turkey.

Turning to the best and worst performers of the week, last week's list of best-performing stocks was led by Vasco Data Security (VDSI:Nasdaq) . The maker of security technologies had an earnings release and upgrade from CIBC to blame, it seems, for a nearly 40% run-up in the stock last week. Granted, Raindance (RNDC:Nasdaq) , which has seen this sort of thing before, saw its stock ran up almost 60% on the week. The reason? Who knows. There was no news, and the chatters in various online message boards spend the week asking each other if anyone had any idea what was going on. All such vacuums get filled, of course, so the rumors were legion, from loose talk of takeovers, to the obligatory "Money managers are accumulating!" (Click here for the best performers.)

Over on the list of weekly losers, pride of place went to Connectics (CNCT:Nasdaq) . The specialty pharmaceutical company had a downer of a week, losing almost 25% in the shortened trading session. The reason? The company learned late Tuesday that the FDA had concluded its Extina drug was not effective for the treatment of seborrheic dermatitis. Investors weren't exactly giddy at the news, especially given that Connectics was forced to adjust its sales and earning outlook. (Click here for the worst performers.)

Turning to the economic week ahead, things start on Tuesday with Chicago PMI due, as well as and consumer confidence figures. On Thursday we will see weekly jobless claims, factory orders and durable goods orders. Finally, on Friday we have November's nonfarm payrolls data due to be released. While most investors have stopped fretting endlessly over jobs numbers, a really bad (or good) number could still cause market palpitations and perspiration.

Over on earnings, it is a light week. How light is it? The highlight is the raft of Canadian banks reporting. Sure, we have Albertson's (ABS:NYSE) due on Thursday, but other than that, it's all Canadian banks, all the time.

Finally, here are some articles and papers worth reading:

Editor's note: To access some of these stories, registration or a subscription may be required. Please check the individual links for the site's policy.

Wal-Mart says holiday season sales began in lackluster style. (Reuters)

Two trillion dollars in money market funds could trend into the market early next year. (Reuters)

The Street Track Gold ETF has been so successful that you can expect a host of copy cats. (IDD)

Chinese competitors are making inroads in more areas than commodity manufacturing. (Business Week)

IT and consumer staples look set to be beneficiaries of a lower U.S. dollar. (Business Week)

Warren Buffett called credit derivatives "weapons of financial mass destruction" when they are more like "freedom fries." (Bloomberg)

Barron's warns on oil supplies, muses about Google's valuation, pans Audiocodes, and praises an analyst calling Amazon a "sell." (Barron's)

China's call this week for the U.S. to gets its deficit under control was mischievous. (L.A. Times)

How private equity managers became the new kings of capitalism. (Economist)

Feds clarify VoIP rules, and result will be a better investing climate. (The Deal)

Trader Monthly is becoming a guilty market pleasure: People read it and pretend they don't. (New York Times)

Whispers continue that China will cut its holdings of U.S. government debt. (Financial Times)

Taser-safety disagreements just won't stop. (New York Times)

New method to produce pure hydrogen with less energy could be boon for fuel-cell makers like Ballard. (New York Times)

Hot technologies for 2005 include blade servers, VoIP, RFID, storage and Linux. (VAR Business)

Small businesses plan double-digit IT spending increases. (CRN)

Heating oil and petroleum markets look tight as we head into the winter. (EIA)

Research: Some interesting papers on upcoming changes in economic indicators. (OECD)