We’re told media conglomerates are among the most hated industries in the market today. Everyone knows they are struggling to keep afloat with competition from the Internet. Newspapers compete with blogs and free news sites. Magazines compete with nontraditional gossip and entertainment websites. And television ad revenue is continuing to dry up because of TiVo and DVRs. Even motion picture studios and record labels aren’t realizing what they’d like because of the never-ending efforts of media piracy.

But that doesn’t explain why these companies are still trading at astronomical ratios. Take The New York Times Co. for instance. NYT is one of the most out-of-favor stocks on Wall Street, or at least that’s what you’d think. Meanwhile, it’s trading at more than 2.2 times its book value. That means that if they called it quits tomorrow, shareholders would only receive about 45% of their money. And by shareholders, I mean preferred shareholders. Commoners probably wouldn’t get a penny.

Rupert Murdoch’s  News Corp (NASDAQ:NWSA) is a little better at 1.5 times book, which would be a fair valuation for a growing business. Murdoch’s precious Wall Street Journal addition isn’t even helping. He can add as many of these fallen media giants as he wants. It’s still not helping him grow his bottom line.

The problem is debt. These companies are swimming in it – especially smaller, regional media companies. Citadel Broadcasting, owner of the ABC Radio Network and 4,500 affiliates, is expected to close its doors soon, even though it somehow pulled a $2 million interest payment out of thin air earlier this month. The company owes some $2 billion, but its common stock is worth about six cents per share on the bulletin boards.

We already know what happened to Tribune Co. The owner of the 162-year-old Chicago Tribune filed for Chapter 11 last December, and was just cleared to sell the Cubs and its Wrigley Field.

These stories are nothing new. They’ve been happening for a while, and it doesn’t look like they are going away any time soon. According to Reuters, television and print companies, along with automobile and airlines, are about four times more likely to go bankrupt in the next year than any other type of company

So why are the likes of The NY Times and News Corp still trading for more than they’re worth?

To us, it sounds like another case of investors covering their eyes and ears and pretending not to know there’s even a problem. So instead of building up the bubble, we’re just sitting on years of letting the bubble bounce on down the road. Today’s economic situation might just be the pinprick to pop this forgotten 20th century blister.

Last year, print ad revenue fell 18%. When these advertisers start filling newspapers and magazines again, they’ll do so in the online versions first. After all, that’s where the sweet 18-34 age group spends most of its time.

Murdoch and Turner can spend any amount of money on traditional media business they want. The industry as we know it – and the stocks that represent it – are headed for a collapse worse than the tech and financial services industries. At least tech and financials still play a significant role in the world economy. Television and print media don’t.

You can see how the market treats ugly industries. It just lets them hang out for years longer than they should. GM was dead long before Obama grabbed the defibrillators. The same has been true with television and print. That’s about to change.

Both the auto and television/print industries as we know them are showing us a new way to watch a collapse. Make sure you’re on the right side of this trade.

Sincerely,

Jim Nelson

Source: The New Way to Collapse an Industry

Investors can be excused if the word “October” is one that strikes fear into their hearts.

The trouble is, it’s actually September that deals investors the toughest monthly hands.

That’s September – as in the month that starts today (Tuesday).

After a rally that’s seen U.S. stocks surge 53% from their March lows (including 3.5% in August, alone), “investors are wondering if September will live up to its reputation as the month in which the S&P 500 posts its worst price performance and frequency of decline,” Sam Stovall, chief investment strategist at Standard & Poor’s Equity Research (NYSE: MHP), told MarketWatch.com yesterday (Monday).

Since 1929, September is actually the worst-performing months for stocks, with the S&P 500 suffering an average decline of 1.3% (compared to an average monthly advance of 0.5%), Stovall said.

The Dow Jones Industrial Average – the index that’s more closely followed by retail investors – tells a similar story. In fact, if you look at the Dow over the last 100, 50 and 20 years, September is the only month in which the average monthly performance has been negative, the Bespoke Investment Group concluded in a recent research report.

Over the past 100 years, the Dow has suffered an average decline of 0.96% in September, with a positive month 42% of the time. The average loss widened to 1.23% for the last 50 years and to 1.49% for the past 20.

Fall, in general, hasn’t been kind to investors: Of the 15 largest point declines in the Dow, six have come in October, four in September and two in November (See accompanying graphic).

Given that, investors “may have a reason to fear a setback in September,” Stovall told the news service. “We don’t know whether concerns over the upcoming [third-quarter] earnings reporting season will trigger this anticipated digestion of gains, or if further nervousness emanating from the Chinese stock market over the prospects of a slower-than-expected growth in GDP will cause U.S. equities to trim some of its recent advances, but September is as good a month as any in which to suffer a setback.

Stovall says that Standard & Poor’s investment committee believes that stocks are “are due for a period of consolidation” – Wall Street parlance for a potentially painful drop – before resuming their advance.

Not all Septembers are the same, however, Bespoke Investment’s recent shows. And this one could be particularly rocky.

When the Dow has a positive August, it does well in September more often than not. But when three specific market criteria are met, history shows that it’s best for investors to fasten their seatbelts, since they’re usually in for a rough September, Bespoke researchers found.

And – unfortunately – all three of those criteria have been met this year. Those three conditions are:

• The Dow is in positive territory year-to-date (+719.89 points, or 8.2%).
• The Dow is in positive territory during the past three months (+995.95 points, or 11.72%).
• The Dow is in positive territory in August (+324.67 points, or 3.54%).

Of the 17 times in the past when the Dow has boasted a positive return in all three of those time periods, the index has averaged a 1.73% decline for September, with positive returns for the month just three times. And those three months were each about 20 years apart.

Mark Arbeter, S&P’s chief technical strategist, told MarketWatch that the S&P could fall all the way down to 940 – an 8% decline from the close yesterday (Monday) – before continuing its advance to a fresh recovery high.

Indeed, S&P’s Stovall said that “while past performance is no guarantee of future results, history hints that September certainly has the reputation.”

Not everyone is so bearish, however.

Michael Darda, MKM Partners’ chief economist, this week told Barron’s that the stock market’s strong performance “perhaps [is] telling us that the idea of a painfully slow U.S. and global economic recovery is just plain wrong.”

And even if there is a pullback, it could be both shallow and temporary – because of the huge cache of cash on the sidelines. While it’s true that a record $327 billion in cash has flowed out of money-market mutual funds since March 11, that still leaves $3.58 trillion – down from the high of $3.92 trillion, but equal to 34% of the U.S. stock market’s total capitalization, Mizuho Securities Co. Ltd. Chief Investment Strategist Carmine Grigoli told Barron’s.

In 2002, when the last bull-market run began, money market cash equaled 29% of the stock market’s total capitalization. And it’s nearly double the 19% ratio that was present at the 2007 stock market peak, Grigoli told the closely watched Dow Jones (Nasdaq: NWSA) investment weekly.

And back then, the U.S. central bank wasn’t holding the benchmark Fed Funds rate at a historic low of roughly 0%.

Because cash earns almost nothing today, “as financial conditions improve and fear subsides, sideline cash is drawn into higher-risk instruments such as bonds and stocks,” Grigoli told Barron’s. That’s why we’re in “the early stages of a liquidity-driven bull market that could take stock prices substantially higher.”

After we navigate September, that is.

Source: Forget About October – September is the Worst Month for U.S. Stocks

The deal also marks another chapter in an ongoing saga featuring John Malone, Liberty’s CEO, and rival Charles Ergen, the satellite-TV pioneer behind Dish Network Corp. (DISH) and sister firm Echostar Corp. (SATS).  The two have occasionally worked together but are major competitors in satellite, as they were when Malone controlled cable-television company Tele-Communications Inc.

“Sometimes they play nicely together in the sandbox, but sometimes they are good, old-fashioned rivals,” satellite analyst April Horace of Denver-based Janco Partners told the Denver Post. Both companies are headquartered in Englewood, Colorado.

Under terms of the agreement, Liberty would provide a $280 million senior secured loan   to help Sirius repay $171.6 million in convertible notes due yesterday (Tuesday), which are owned by Ergen.  At a later date, Liberty would provide another $150 million loan to XM Satellite Radio, Sirius XM’s wholly owned subsidiary, and purchase up to $100 million of XM’s credit facilities, according to Bloomberg News.

The loan will pay Liberty a whopping 15% interest rate and mature in December 2012. When the second loan is completed, Liberty will get 12.5 million shares of preferred stock convertible into 40% of Sirius XM common stock.

The deal allows Sirius to avoid bankruptcy and a major shuffle of talent. A bankruptcy filing could have threatened contracts with such luminaries as Martha Stewart and Bob Dylan, as well as the company’s five-year, $500 million pact with Howard Stern.

Sirius has never been profitable, mainly because it was burdened with massive interest payments on its debt. After acquiring rival XM in July, it was hit hard by the credit crunch and poor auto sales – its main distribution channel.  Sirius XM has about $3.25 billion in total debt.

“Sirius is in the process of getting out of the woods because Liberty is putting up a lot of money,” David Joyce, an analyst with Miller Tabak & Co., told Bloomberg News. “It shows that Sirius will be around for a long time.”

Malone and Ergen, who have been fierce rivals over the decades, were again pitted against one another by Sirius Chief Executive Mel Karmazin to save the company he formed just seven months earlier.

In 2003, Ergen abandoned a bid for DirecTV’s then-parent company, Hughes Electronics Corp. because he couldn’t get regulatory approval. Malone gained control of DirecTV last year after buying out Rupert Murdoch’s News Corp.’s (NWSA) stake. Ergen’s Dish Network had 13.8 million customers as of Sept. 30, trailing DirecTV’s 17.3 million.

The Liberty deal came after recent efforts by Ergen to acquire control of Sirius by purchasing its maturing debt, following an unsuccessful takeover bid in December, according to the sources cited by Bloomberg.

Ergen, a former professional gambler, bought the majority of a $300 million batch of discounted Sirius bonds that came due Tuesday. The company, said Feb. 13 it might have to file for bankruptcy if it couldn’t reach an agreement to restructure the debt.

Ergen offered to restructure the debt and invest several hundred million dollars into Sirius in exchange for control of the company.  That plan was scuttled by Liberty’s “white knight” move, which allows Karmazin to keep his job as CEO.

Liberty’s plans for Sirius are unclear.

“We think that John Malone and Charlie Ergen’s strategies are different,” Thomas Eagan, an analyst at Collins Stewart told Reuters. “We think that Charlie Ergen’s strategy may have been more about creating a broader strategic play in wireless services as he has attempted mobile video before. For John Malone it’s more of a financial investment. He had this venture fund with cash available and he figured this was a worthwhile investment.”

Whatever his motives, Ergen’s strong personality and previous clashes with Karmazin may have presented obstacles impossible to overcome.

The two locked horns in 2004 when Karmazin was head of media giant Viacom. When talks broke down over rate hikes imposed by Viacom for the rights to carry certain channels, Ergen published Karmazin’s home number and told subscribers to call him.

“I can’t imagine Ergen and Mel Karmazin working that well together,” said Matthew Harrigan, an analyst at Wunderlich Securities.

Source: Sirius Business – Liberty Injects $530 Million into Satellite Radio Provider

But not Adam Lass, writing for the Taipan Publishing Group. He readily points out that ExxonMobil made $45.2 billion in pure profits last year alone. For a company producing enormous amounts of cash in a “Cash is king” economy, he recommends you stay long ExxonMobil.

This from Adam Lass:

Exxon Mobil has proven that they – and you! – can still make money in a recession.

The numbers are in and it’s official: The tail end of 2008 stank too, making for a complete set of matching god-awful quarters.

Starting at the top, U.S. GDP “officially” shrank 3.8% in Q4, supposedly the worst performance in the past quarter century. For the year (come on, I have to do this, but read it fast, like pulling off a Band-Aid or such), the Commerce Department says we grew a mere 1.3%, down from a blistering 2% in 2007.

But wait (as they like to say on those cheap TV ads for Chinese tomato slicers): There’s more! This is only a “preliminary number,” Commerce warns in the fine print, and subject to downward revision once no one is paying attention.

Feeling bummed yet? Down in the mouth? It gets worse before it gets better. (It does, however, get better by the end, so please, bear with me and read on.)

Bad News and Worse?

Remember when Professor Nouriel Roubini was considered a rogue outsider for his steadfast insistence that we were headed for a fall? Now he is lauded at Davos as prescient by the very folks who used to excoriate him.

Roubini celebrated his ascendancy to the “in-crowd” by musing as to whether we might be in a genuine depression: “I’m not a permanent bear. I’ll be the first to call for a recovery, but I just don’t see it yet, and it just keeps getting uglier.”

Roubini wasn’t the only one moping about Davos last week. Megalithic publisher Rupert Murdoch notes that people worldwide are “depressed and traumatized” as their life savings evaporates: “It really doesn’t matter where you’re talking about in the world. There’s no hiding place…”

Upon hearing such moaning and groaning, analysts promptly downgraded Murdoch’s News Corp (NWSA: NASDAQ) for the fifth time in five months. “While we have long viewed Rupert Murdoch as the most visionary CEO… we are increasingly surprised/frustrated with his lack of strategic direction.”

How to Turn Wall Street’s Pain Into a Quick 347% Gain!

While current market conditions are treacherous for naive “buy and hold” investors, a small group of smart folks are converting the market slide into gains of 251%… 307%… even 387%… week in and week out… no matter how far the Dow falls. Here’s how you can join them — free — for a full six months!

No Reason to Quit

Hey guys: It’s hard to remember that your goal was to drain the swamp when you are up to your behind in alligators. That’s what makes it a depression – everyone gets so damned depressed they can’t see anything good coming down the pike. “It’s bad now, and it’ll always be like this.”

It ain’t true when your gawky 13-year-old drama-queen daughter says it about middle school, and it ain’t true when mawkish down-in-the-mouth analysts and petrified economists say it about the stock market.

Oh, I’m not saying that times are good, or that it’s easy for a company to gin up profits these days. Lord knows the list of folks announcing losses is as long as my arm. And quite frankly some of them deserve it.

Sorting Out the Winners

I mean come on: Kodak (EK: NYSE) could have stayed king of the imaging hill, but they chose to ignore digital as a mere fad. Boeing (BA: NYSE) allowed a labor strike to deprive it of the last good year it will probably enjoy for some time to come. And poor old Ford (F: NYSE) may actually have a tough-minded visionary at the helm, but it is an auto manufacturer in a year when that is simply the wrong business to be in.

But there are companies out there bucking even this horrendous headwind, by making a great deal of money for their stockholders. Exxon Mobil (XOM: NYSE) for example, has just announced that they not only made money, they made $45.2 billion in 2008. That is more profits than anyone else. Anywhere. Ever.

The funny thing about Exxon Mobil is that no matter how many times they put out this statement, no one ever believes that they can do it again. “It’s a fluke! Oil prices are too high… oil prices are too low… yadda, yadda, yadda.”

“They Can’t Possibly Do It Again” (and Again and Again and Again)

This season’s complaint is that Exxon Mobil’s profits for the last quarter are down 33% from the previous quarter one year ago, because they produced 1% less raw product. They do seem to have managed to make $7.82 billion dollars anyway.

Look, I understand as much as the next guy that past performance does not necessarily indicate future gains. And yes, times are hard and threatening to get worse.

But you shouldn’t let depression blind you to the fact that XOM is still producing enormous quantities of cash during the worst quarter in the past quarter century… a quarter that saw most of their friends on the exchange floor losing their shirts (and their lunches).

So yes, I was – and am still – long XOM shares and XOM calls.

Source: All-Bad-Everywhere-Forever? Nonsense…

But if the central bank does pare short-term interest rates, it’s likely to be the last such move in awhile; the Fed will take a break and give its rate cuts a chance to work their way through the U.S. economic system.

Despite an active-economic-calendar schedule this week – which includes a report on first-quarter gross-domestic product, and several other statistics that could confirm that the U.S. economy is entrenched in a recession – the Fed’s machinations should dominate this week’s headlines, given that the central bank’s interest-rate-setting arm is set to meet Tuesday and Wednesday.

Any announcements about interest rates will be made at 2:15 p.m. Wednesday. Experts also say that whatever the Fed says about its expectations will be just as important as what it actually does to the benchmark Federal Funds rate.

“I don’t think there’s any question that they’ll cut [a quarter-percentage point] off the rate,” David Rosenberg, chief economist for Merrill Lynch & Co. Inc. (MER), told The International Herald Tribune. “The real question is what they say about the future. It won’t be an ‘all clear’ signal. But they’ll find a way to tell the markets that they’ve done enough for now, simply put.”
Not everyone agrees.

“There is no reason why the Fed should be cutting rates right now,” Richard Yamarone, director of economic research at Argus Research Corp., told MarketWatch.com.

Yamarone may be thinking back to some of the public comments certain of the central bankers themselves have been making.

Back on April 18, Fed officials hinted that they would be reluctant to cut the benchmark Federal Funds rate yet again, given that the slumping U.S. economy also faced a major inflationary threat. Indeed, Philadelphia Fed President Charles Plosser warned against believing that interest-rate cuts were “the solution to most, if not all, economic ills.”

Plosser is one of the Fed’s major anti-inflation hawks At the time, Plosser was merely the latest in a string of policy-makers to warn about the rising risks of inflation, essentially suggesting that another rate cut would probably be a very tough sell.

In a speech at Drexel University’s LeBow College of Business in Philadelphia, Plosser said real interest rates were now at “an accommodative level, meaning borrowing costs were low enough to start boosting the U.S. economy’s growth rate back toward its normal historical norm, Reuters reported.

The futures market is projecting a Fed Funds rate of 1.75% by the end of this year. Here’s a look at the futures market’s month-by-month expectations for short-term borrowing costs for the remainder of 2008:

• April: 2.17%.
• May: 1.89%.
• June: 1.85%
• July 1.79%.
• August 2008: 1.76%.
• September 2008: 1.76%.
• October 2008: 1.77%.
• December 2008: 1.73%.

The worries about inflation that Plosser and other inflation hawks have are very real. And those concerns don’t exist solely on our side of the Atlantic. The low U.S. rates are contributing to a weakness in the greenback that’s sent the American currency to record lows against most other key world currencies. That’s fueling a massive run-up in the cost of energy and food-related imports – and that’s inflationary for U.S. buyers.

But it’s made U.S. exports very competitive abroad, acting almost as a big discount for foreign buyers of such wares as Boeing Co. (BA) jetliners. In fact, just last week Boeing surprised Wall Street with record earnings and announced a record order backlog. And pan-European arch-rival Airbus SAS., was forced to announce a price increase on several  of its commercial airliners – because of rising steel prices and because of the falling dollar.

French Economy Minister Christine Lagarde yesterday (Sunday) that the gap between the U.S. and Eurozone interest rates was way too large, and called for a change in rate policies on one side of the Atlantic, or the other.

“We are in a delicate situation where we have, on the one hand, an American Federal (Reserve) which has a policy of very low rates and a European Central Bank which has maintained high interest rates,” Lagarde told LCI Television and RTL Radio, the global wire service Reuters reported. “The differential in interest between the two, it seems to me, is a little too big at the moment.”

Paris has long been a vocal critic of what French President Nicolas Sarkozy has termed the ECB’s overly narrow focus on fighting inflation – and has previously been criticized by Germany for meddling in the business of the “independent” central bank.

With Eurozone inflation running at about 3.6% – its highest rate since the measure for that portion of the European market began in 1997, the European Central Bank (ECB) has left its key refinancing interest rate unchanged at 4.0%, despite some very definite signs that Eurozone growth is slowing.

By comparison, the key U.S. interest rate is at 2.25%, though it may be heading lower this week, and inflation is “officially” said to be at right about 4% – though such experts as Money Morning Contributing Editor Martin Hutchinson believe the actual U.S. inflation rate is actually much higher.

Although the FOMC meeting is likely to top the economic the economic news of the week this week, the GDP report will come in a fairly close second and will be nearly as closely watched by some experts. The reason: Many eternal pessimists are expecting the report to show negative growth during that three-month period.

Why is that important? Simple: According to the National Bureau of Economic Research (NBER), two consecutive quarters of negative growth constitutes a recession.

Most folks “feel” like the U.S. economy is already in a recession. An official designation by the NBER – which usually comes well after the fact – would simply make it official.

In the meantime, some of these other reports this week could help serve as an interim and unofficial “confirmation” of that dour diagnosis of the U.S. economy:

• The health of the manufacturing sector will get a solid assessment via Thursday’s release of the much-watched ISM survey and Friday’s report on factory orders.
• The all-important U.S. labor markets will get significant scrutiny via Thursday’s report on initial jobless claims and Friday’s reports on the U.S. unemployment rate and on non-farm payroll data.
• We’ll get a bit more insight into the psyche of the American consumer with Tuesday’s report on consumer confidence for the month of April and Thursday’s report on personal income and spending for the month of March.
• And we’ll get an overview of Corporate America’s health, as U.S. energy giants Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) reveal how their profit reports have been boosted by record energy prices [likely also prompting new calls for Congressional investigations into allegations of price gouging].  Starbucks Corp. (SBUX) will follow up recent warning with an actual announcement, while Office Depot Inc. (ODP) and Radio Shack Corp. (RSH) will give investors a look inside the world of retail.

Market Matters

Two weeks ago, investors disregarded any semblance of bad news (and lately, there has been plenty) and instead took the stock indices to their highest levels in months. Last week, investors allowed the earnings releases to guide their trading activities while awaiting the Fed’s interest-rate decision and commentary.

So just what did the recent earnings reports say about the current state of Corporate America?

Financialscontinue to stoke the negativity (no surprise there) with Bank of America Corp. (BAC), investment banker Credit Suisse Group (CS), and bond insurer Ambac Financial Group Inc. (ABK) reporting more disappointing results.  Drugmakers, on the other hand, enjoyed a nice quarter with Merck & Co. Inc. (MRK) and Novartis AG (NVS) beating expectations.  While a sluggish economy can’t keep folks out of McDonald’s Corp. (MCD) (as least in its international markets), it does seem to be impacting coffee intake as Starbucks warned that this week’s results (and those for all of 2008) will miss earlier projections.  Of course, dire times lead to more nervous smoking (and higher cigarette sales) as happy Philip Morris International Inc. (PM) shareholders found out this quarter.  While cost-conscious folks stayed home and watched more DVDs, Netflix Inc. (NFLX) warned that future subscriber growth may be limited.

Both Delta Air Lines Inc. (DAL) and Northwest Airlines Corp. (NWA) posted sizable losses on skyrocketing fuel costs, leading some analysts to question the wisdom behind the proposed merger. While the world’s largest shipper, United Parcel Service Inc. (UPS), experienced a jump in profits, management expressed concern about the quarters to follow, since consumers just don’t seem quite as interested in finding out “what Brown can do for you.”  Even techs, which previously had been a savings grace for the market, turned pessimistic this week.  Apple Inc. (AAPL) and Texas Instruments Inc. (TXN) reported decent earnings, but warned about their respective outlooks.

Likewise, high-tech bellwether Microsoft Corp. (MSFT) disappointed with its profit numbers, while investors wait with trepidation to see what becomes of Microsoft’s bid for Yahoo! Inc., (YHOO). Meanwhile, Yahoo beat “The Street’s” expectations. However, the three-week deadline that Microsoft gave Yahoo to come to an agreement on its unsolicited bid passed Saturday without any announcement from either side, leading to the possibility that the battle for Yahoo is about to turn hostile, MarketWatch.com reported.

ConocoPhillips (COP) showed that record energy prices are not hurting everyone, as the No. 3 U.S. oil company reported a 17% increase in profits.

Transactions typically imply growing confidence in corporate boardrooms as management finds the value in certain acquisition targets.  Last week, News Corp. (NWS.A) moved closer to buying Newsday and giving Rupert Murdock greater control over the New York press.

Insurance giant Liberty Mutual Holding Co. Inc. agreed to buy SAFECO Corp. (SAF) in a $6.2 billion deal that will create the 5th-largest property and casualty firm.  Triarc Cos. Inc. (TRY) soon may be adding those terrific “hot-and-juicy” square burgers and addictive Frosty drinks to its Arby’s roast-beef-sandwich menus as it looks to acquire Wendy’s International (WEN) in a deal valued at $2.34 billion. And, of course, there’s still the Microsoft-Yahoo proposal.

With a mixed week on the earnings front, stocks traded relatively flat as investors took some profits from last week’s newfound bullish sentiment, while still searching for a bargain or two.

Economically Speaking

For many Fed-watchers, the prospect for another rate cut has been a foregone conclusion.  After all, central bank Chairman Ben S. Bernanke and clan have let their creative juices flow [not to be confused with the creative juices of those Wendy’s hamburgers] over the past few months; the Fed has tried everything from the aggressive rate-cutting campaign to liquidity injections to arranging the buyout of The Bear Stearns Cos. Inc. (BSC) by JPMorgan Chase & Co. Inc. (JPM).

Suddenly, some great prognosticators believe the Fed may be “seven and done” as they drop the Federal Funds rate again (by a minimal quarter of a percentage point this time around) – before going on a “summer hiatus” to give their earlier work the time to take effect.

With oil prices hovering around the (once unheard of) $120/barrel level, some policymakers are sure to claim that inflation should be considered as critical a concern as the sluggish housing market to the U.S. economy’s health. Indeed, comments such as those of Philly Fed President Plosser make it clear that inflation is already becoming an increasingly important consideration.

Additionally, the European Central Bank seems content to keep its lending rate at 4%, so further Fed actions will continue to have devastating impact on the value of the dollar.

The economic calendar was relatively light last week as analysts rested up for this week’s vast array of important data. After a surprising climb (better known now as an aberration) in February, existing home sales plunged again in March, while new homes sales fell to their lowest level in more than 16 years.

Furthermore, the median price of a new home dropped by more than 13% last month, the largest such decline in almost four decades.

Durable goods orders fell in March, as well, although once the volatile transportation sector was removed from the equation, the results did not look half bad.

We hope that investors and analysts got plenty of rest over the weekend to get ready for the bustle of economic reports due throughout this week. Talk of recession should resume with the release of the first-quarter GDP, which many eternal pessimists believe will show negative growth during that three-month stretch.

Weekly Economic Calendar