Sunday links: an auspicious start

08Jan06

The hot start for the stock market in the New Year has elicited some interesting statistics that support further market gains.

Michael Santoli in “The Trader” column in Barron’s notes these promising statistics.

For what it’s worth, only six times before since 1955 was the S&P up on each of the first four days of a year, says Michael Panzner of Rabo Securities USA. Each time (1964, 1967, 1976, 1979, 1987 and 1988) all of January was up and the full year was also positive. Not statistically rigorous, but it’s something to chat about at halftime of the football playoff games this weekend.

Mark Hulbert at Marketwatch.com notes that Dow Theorists can now “breath easier” as the Dow Jones Industrials has risen to a new high to confirm the move of the Transportation index.

Crossing Wall Street analyzes a piece in the New York Times that attempts to get at a valuation for Berkshire Hathaway (BRKa). The consensus seems to be that the stock is undervalued, with the usual caveats in regards to Buffett and his leadership. The story will best be told as Buffett puts the company’s large cash hoard to work.

Jon Birger at Fortune interviews the low-profile head of the now largest bond manager, Western Asset Management. S. Kenneth Leech is wary of the inverted yield curve.

“It’s a terrific indicator,” Leech said of the link between inverted yield curves and recession. “That’s why the Fed should be cautious about continuing to raise rates. We hope they won’t.”

Daniel Gross in the New York Times notes that the world is experiencing flattening yield curves, just like the U.S. In short,

“The conundrum is global,” said Lakshman Achuthan, managing director at the Economic Cycle Research Institute, based in New York. The same factors that are influencing the interest rate climate in the United States are having similar effects on overseas bond markets.

Randall W. Forsyth in Barron’s conducts a wide-ranging interview with top bond fund managers, Daniel Fuss and Kathleen Gaffney managers of the Loomis Sayles Bond Fund (LSBRX). We found the interview interesting because Fuss and Gaffney really do invest on a global basis, and are finding value in some odd places.

Ticker Sense has another cool graph depicting equity market performance in 2005. This time they breakdown performance on a state-by-state basis. Note the influence of the auto equities on the state of Michigan.

Daniel Drezner notes a new study that is at odds with the popular press reports of a massive disparity between the number of engineers graduated by the U.S. verus both China and India.