Take on the ticker

Jack Ablin of Highland Park is chief investment officer at Harris Trust and Savings Bank, ChicagoWhat moved the markets last week?"It was rather a turbulent week, given that it was the week before Christmas and a lot of people are trying to get out of the office. We had quite a few issues. One, Circuit City had pretty lousy results with pretty lousy expectations. That stock is down 26 percent for the week. But I think the biggest splash in my book is this MBIA, this AAA municipal bond insurer, revealed that it now has something like $22 billion in exposure from guaranteeing all these collateralized debt obligations. That stock was cut by about a quarter and its AAA rating is in serious jeopardy #8230; Collectively, these municipal bond insurers insure roughly a couple trillion in municipal bonds."The sale of the Tribune Co. finalized last week. Are newspapers good investments?"It's a funny business. It's a business that is clearly in transition. The good news is, you've got newspapers that have proprietary journalists and high profile journalists will command a premium #8230; If the transition can be handled properly, the business can be more profitable, because they can distribute this preparatory journalism much cheaper (online) #8230; than paper copy #8230; I think banking on management at these large scale papers may be an edge."Are stocks cheap these days?"Stocks are cheap on current expectations #8230; Expectations now are that earnings next year will grow 13.5 percent. The problem is you have an ex-Fed chairman (Alan Greenspan) saying the chances of a recession are 50 percent. My assessment is the chances are a bit higher than that. So, I don't see how a recession squares with 13.5 percent earnings growth #8230; If we can avoid a recession, I'd say stocks could just muddle along and do all right. But due to the downside risk to the economy right now, my sense is, I'd rather wait and see. Maybe it will be March before we see the impact of the mortgage resets and the housing market on consumer spending."Has the falling U.S. dollar found its bottom?"I think the dollar has found a cyclical bottom and that really has more to do with the dynamics between the U.S. and the European central banks. The good news is that, if we do fall into recession next year, it will probably be the most widely anticipated recession on record #8230; The premise, here, is that continental Europe and maybe the UK could slip into a similar recession and those central banks will have to lower their rates. And that is why I think the dollar is starting to go higher, because I think the markets have begun anticipating lower rates overseas soon."