Wall Street Blogger

US Consumers' Credit Scores Rising

2010-08-15T09:39:00.000-04:00

U.S. consumers have tightened their belts to the point where they could take on a lot more debt if they wanted it- but they don't. The average credit score rose to 704 in July, a level not seen since the first quarter of 1998, according to data that Equifax, one of the largest U.S. credit bureaus, provided exclusively to Reuters. That means lenders consider consumers to be improved credit risks and would be happy to have more of them as customers. Yet many consumers still seem to find debt too risky, said Dann Adams, an Equifax executive. "Traditionally, what you see is after a recession is that consumers are the engine on the locomotive for economic growth," Adams said. "Now it looks like they're the caboose."

The data is based on Equifax' 200 million-plus files of U.S. consumers using credit. The credit risk score forecasts the likelihood a consumer will fall 90 days or more behind on debt within two years, with 850 the highest score. The higher the score, the less likely a borrower will fall behind on debt. A decline in debt mirrored the rise in credit scores. July saw total consumer debt outstanding fall to $10.8 trillion from a peak of $11.5 trillion in October of 2008. Consumer debt includes mortgages and credit cards. The savings rate rose to 6.4% in June from 6.3% in May to reach the highest level since June of last year.

"The big question is whether that money moves back into the economy," Adams said. This protracted reluctance on the part of consumers to take out debt and spend it is unmatched in recent memory. Even after the September 11, 2001 attacks on New York City's World Trade Center, spending rebounded within four months, he said. The United States will not see a similar upward trend until unemployment abates and home values stabilize, Adams said, adding he doubts the unemployment numbers will drop in the near-term. In the meantime, U.S. consumers are husbanding their resources instead of spending on items big or small.

Fed Official- Low Rates a 'Dangerous Gamble'

2010-08-13T15:52:00.000-04:00

Keeping interest rates at record lows is a "dangerous gamble" that could hurt the economy later on by unleashing inflation or new speculative bubbles, a Federal Reserve official said Friday.

Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, made the comments just days after dissenting with the Fed's decision to take an unconventional step to strengthen the fragile recovery by buying government debt. Hoenig did say the economy still needs the support of ultra-low rates now. Interest rates have been at record lows near zero for nearly two years. But he worries that keeping rates too low for too long could create problems later on. For instance, low rates could spur bubbles in the prices of commodities, bonds or other asset prices. Or, they could encourage people and businesses to take on too much debt again and overly leverage themselves, he suggested. "If we again leave rates too low, too long out of our uneasiness over the strength of the recovery and our intense desire to avoid recession at all costs, we are risking a repeat of past errors and the consequences they bring," Hoenig said in a speech in Lincoln, Neb.

Critics like Hoenig blame the Fed for keeping rates low for too long a period after the 2001 recession. Those low rates fed a housing bubble that eventually burst, and plunged the economy into a severe recession in late 2007, they say. "I believe that zero rates during a period of modest growth are a dangerous gamble," Hoenig said.

James Bullard, president of the Federal Reserve Bank of St. Louis, is concerned that the weak recovery could push the United States into a deflationary period, like the "lost decade" Japan suffered through in the 1990s. Low rates help combat deflation, a widespread and prolonged drop in prices of goods and services, values of stocks and homes, and in wages. Hoenig, however, said he sees "no evidence that deflation is the most serious threat to the recovery today."

Nonetheless, the economy's growth slowed sharply in the spring, and unemployment -- now at 9.5% -- has stayed high all year. Low interest rates cannot solve every problem faced by the United States, he argued. "In trying to use policy as a cure-all, we will repeat the cycle of severe recession and unemployment in a few short years by keeping rates too low for too long," Hoenig, said. "I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth, but there is no short cut."

CPI Rises, But Consumer Still Weak

2010-08-13T09:00:00.000-04:00

U.S. retail sales and consumer prices rose in July in a hopeful sign for the economy. Retail sales rose, but the gains were concentrated in auto and gasoline station sales, suggesting underlying momentum in consumer spending remains tame. Sales climbed 0.4% last month following a revised 0.3% drop in June, the Commerce Department said on Friday. Economists polled by Reuters had been looking for a slightly firmer 0.5% gain.

Excluding vehicles, sales advanced just 0.2% compared with a median forecast of 0.3%. Gasoline station receipts, which sometimes reflect price rises rather than increased demand, jumped 2.3%. When autos and gasoline were stripped out, sales actually fell 0.1%.

After emerging from its longest slump since the Great Depression, the U.S. economy has slowed in recent months, raising fears of a "double-dip'' recession. Retail sales are a key component of growth for a country where consumer spending makes up about two-thirds of total economic activity.

US Consumer Prices Rise 0.3% in July

Higher energy costs helped lift U.S. consumer prices in July, the first rise in four months, according to a government report on Friday that could ease concerns about deflation. The Labor Department said its seasonally adjusted Consumer Price Index rose 0.3% last month, after falling 0.1% in June. Analysts polled by Reuters had forecast consumer prices to rise 0.2%.

In the 12 months to July, the consumer price index rose 1.2%, in line with market expectations, after rising 1.1% in June, the report showed.

Take a Look at the Fertilizer Names

2010-08-12T16:11:00.001-04:00

Today, the US Department of Agriculture release a report that said there is a shortage of crops in the United States. This could potential be a huge opportunity for the fertilizer names, which was a sector that turned positive this afternoon. This is a bullish sign for the sector, and based on this report, I expect there to be much more upside for the fertilizer companies. The three companies I like are:
          Monsanto (MON)
          Potash (POT)
          Mosaic (MOS)

A more 'close to home' name that I like is Scott's Miracle-Grow (SMG). SMG announced earnings this week, reporting a quarterly net income of $175.9 million, or $2.65/share, from $147.8 million, or $2.27/share in the year-ago period. Analysts expected a profit of $2.44/share. The company also announced plans to buy back $500 million shares over the next four years and doubled its quarterly dividend to $0.25/share. "Our business and cash-flow are strong, our balance sheet is healthy and our low debt-to-EBITDA level gives us tremendous flexibility in managing our business," said Cheif Executive Jim Hagedorn in a note. Looking ahead, SMG reiterated its full-year earnings forecast of $3.25 to $3.35 cents a share.

Company	Symbol	Stock Price	52 wk Range
Monsanto	MON	57.17	44.61-87.06
Potash	POT	111.9	83.75-128.42
Mosaic	MOS	51.29	37.68-68.28
Scott's Miracle-Grow	SMG	47.94	37.50-49.58

Stocks Slip on Bad Earnings

2010-08-12T14:39:00.000-04:00

Technology companies led the stock market to its third straight loss Thursday after Cisco Systems' (CSCO) earnings report raised more questions about the economy. The Dow Jones is down 80 points in afternoon trading. The NASDAQ composite index had a steeper loss in percentage terms, a reflection of the drop in tech stocks. Analysts said many traders were on vacation, and the market's resulting light volume helped skew price changes.

Cisco Systems Inc.'s revenue from its latest quarter and its forecast for future revenue both fell short of analysts' expectations. The company's stock fell almost 10% and other tech stocks also fell. Investors have been focused on revenue since companies began reporting second-quarter earnings almost a month ago. They're concerned by the connection between revenue and the economy -- if revenue is down, it's a sign that consumers' reluctance to spend is starting to affect companies' sales and profits. Investors see the revenue shortfalls as another sign of a weakening recovery.

Sara Lee Corp.'s (SLE) revenue also missed analysts' forecasts. And retailer Kohl's (KSS) disappointed the market by lowering its earnings outlook because it expects sales to slow during the second half. That period includes the holiday season, when retailers hope to make a large part of their profits.

Stocks extended their losses from Wednesday, when the Dow fell 265 points as investors reacted to the Federal Reserve's lowering of its assessment of the recovery on Tuesday. Economic data from several countries including the U.S. contributed to the heavy selling. Investors don't have a sense of whether the recovery will hold. The uncertainty has led to big losses, but many traders are staying out of the market and not making any moves. That has made trading volume even lighter than usual during July and August, when vacations leave trading desks thinly staffed.

Charlie Smith, chief investment officer with Fort Pitt Capital Group in Pittsburgh, predicted few major market moves for the rest of the month because so many key market players are away. Smith said the market's drop over the past few months was due more to investors' more negative outlook rather than a fundamental change in the economy. "We had a weak recovery back in March and April," Smith said. At that point, the market was moving toward its post-financial crisis high. Stocks began falling after the major indexes peaked in late April.

More Bad Unemployment Data

2010-08-12T09:25:00.001-04:00

The number of people filing new claims for unemployment insurance unexpectedly rose in the latest week to its highest level in close to six months, a fresh signal of a weak jobs market. The number of new claims for jobless benefits rose 2,000 to 484,000 in the week ended Aug. 7, the second straight increase, Labor Department data showed on Thursday.

The four-week moving average, which economists prefer because it smoothes out weekly fluctuations, rose 14,250 to 473,500, also the highest level since the week ended February 20th. Economists polled by Reuters had expected claims in the latest week to fall to 465,000 from the previously reported 479,000.

The number of people still collecting unemployment benefits after an initial week of aid in the week ended July 31st fell 118,000 to 4.45 million, the lowest level since late June. Economists had expected 4.53 million. The four-week moving average of continuing claims fell 64,500 to 4.52 million, the lowest level since December 2008.

Did the Fed Mess Up?

2010-08-11T17:41:00.000-04:00

Stocks stumbled Wednesday in an apparent rebuke of the Fed's announced plans to start using proceeds from mortgage- and agency-backed principal payments to buy U.S. Treasuries. In recent trading, the Dow was down 269 points and the S&P was off 2.8% amid notable weakness in big-cap financials like Citigroup and JPMorgan, tech stocks like Intel and industrial names like Ford and GE.

Dan Greenhaus, chief economic strategist at Miller Tabak, and Michael Pento, senior economist at EuroPacific Capital, don't agree on much, but they do agree the Fed's announcement yesterday was a mistake.
"The Fed acknowledged that GDP growth was slowing," Pento says. "However, their symbolic move isn't really going to do much to boost economic growth." Greenhaus agrees the Fed needs to do more if they really want to boost the economy but notes negative economic data is also weighing on the market today, including:

A day after its trade surplus rose to an 18-month high, China reported industrial production slowed in July, as did urban fixed-asset investment.
Japan machine tool orders rose a weaker-than-expected 1.6% last month.
The U.S. trade deficit rose 19% in June to $49.9 billion, its highest level since October 2008.

The 3% rise in U.S. imports last month is arguably a bullish sign of a recovering consumer, as were the stronger-than-expected results from Macy's. But a higher trade deficit subtracts from GDP because "we don't measure gross domestic consumption, we measure gross domestic product," Pento says. "The fact that consumers are borrowing more to consume more is not something we should cheer about." Pento also argues the market is weak today because the Fed "put an anchor" around the dollar by announcing its plans for a second round of quantitative easing.

Greenhaus disagrees with Pento on the impact of a weaker dollar - in the short term - setting up a broader debate about the value and utility of government stimulus, which you'll see in an upcoming segment.

Lower Open Gives Opportunity

2010-08-11T11:48:00.001-04:00

This morning, the market is selling off ue to concerns of a global slowdown (read post below for details). This decline has created a good opportunity to get into two companies that reported great quarters and are trading much lower than they should be just because the broader market is down big today. These two companies are Macy's (M) and Disney (DIS).

Macy's (M)- Macy's net income rose to $147 million, or $0.35/share, from $7 million, or $0.02/share, in the year-earlier period, which included $0.18/share in restructuring charges. The company raised its full-year profit outlook to $1.85 to $1.90 a share from a previous forecast of as much as $1.80 a share. Also, and more importantly, Macy's management talked about taking market share from their competitors. This is huge, and no one seems to be talking about this statement.

Disney (DIS)- Disney reported a net income of $10.0 billion, or $0.67/share vs what analysts expected of $9.34 billion, or $0.59/share. Disney said the media networks revenue rose 19% to $4.70 billion and studio entertainment revenue rose 30% to $1.6 billion. Also, cable networks revenue rose $561 million to $1.70 billion and parks and resorts revenue rose 3% to $2.80 billion. This was a great quarter for Disney, and ESPN has shown a huge improvement in ad revenue.

Company	Symbol	Stock Price	52 wk Range
Macy's	M	20.32	14.01-25.25
Disney	DIS	34.37	24.89-37.98

Market Sharply Lower at Open

2010-08-11T09:48:00.000-04:00

U.S. stocks opened sharply lower Wednesday after weak manufacturing data out of China and a gloomier assessment of the economy from the U.S. Federal Reserve.

The Dow Jones Industrial Average (DJIA) was down 200 points, or nearly 2%, at the open, after shedding 0.5 percent in the previous session. All 30 Dow components were lower at the start, led by DuPont (DD), Disney (DIS), and Cisco (CSCO).

The pace of growth in Chinese investment and factory output slowed in July, raising worries about the nation's economy, which has been expected to drive the global recovery. Retail sales were also softer than expected. In U.S. economic news, trade deficit widened more than expected to 18.8% in June on a surge of consumer goods from China and other suppliers, while U.S. exports fell, a government report showed on Wednesday. Mortgage purchase and refinancing applications, meanwhile, rose by less than 1% in the first week of August, even as 30-year loan rates fell to 4.57%, the lowest in 20 years of record keeping by the Mortgage Bankers Association.

European stocks were down in morning trade, led lower by banks such as Societe Generale and UBS, while the Nikkei index fell 2.7%, suffering its worst session in nearly a month as a stronger yen deepened worries about the longer-term prospects for Japan's economy.

The dollar fell to an eight-month low versus the yen on Wednesday as traders pared back on risk following the decision from the Fed to invest proceeds from mortgage backed securities into government debt.

Fed Signals More Easing

2010-08-10T15:14:00.000-04:00

The Federal Reserve on Tuesday took fresh steps to lower borrowing costs amid a softening economic recovery, announcing it would use proceeds from its maturing mortgage bonds to buy more government debt. The decision to reinvest proceeds from the more than $1.3 trillion in mortgage-related debt the Fed holds, an effort to keep market-set borrowing costs down, represents a significant policy shift. Just a few months ago, the central bank had been avidly debating an exit strategy from the extraordinary stimulus delivered during the financial crisis.

"To help support the economic recovery in a context of price stability, the committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities," the Fed said in a statement. The move was somewhat surprising.

Although many analysts and investors had expected the Fed to announce it was reinvesting the mortgage proceeds, most had thought it would buy more mortgage debt instead of government bonds.

Some analysts believe the Fed will end up having to go further in coming months and restart its shuttered program of outright asset purchases.

"The Fed is a step closer to reviving its program, but it will likely take somewhat slower growth to push it off the fence," said Sal Guatieri, senior economist at BMO Capital Markets. The Fed also left benchmark overnight interest rates steady in a zero to 0.25% range, and renewed its pledge to keep them low for an extended period.

Treasury Yields Continue to Fall

2010-08-10T11:23:00.000-04:00

In the latest battle over who does a better job of forecasting market movements, bonds are nearing a strong signal that a bear market for stocks is right around the bend. Since hitting its most recent high yield of 4.01% on April 5, the 10-year Treasury bond has slid nearly 1.20 percentage points, a metric that signaled in 1990, 2000 and 2007 that a steep drop in stocks was only two months away, according to research from Gluskin Sheff strategist David Rosenberg.

With the 10-year yield at 2.82% in early Tuesday trading and the bond market still red-hot despite continued predictions of its demise, the big bear indicator is looming large. "Declines of this magnitude very often presage the onset of bear markets and recessions," Rosenberg says. "Typically, equities and then economists are late to the game...What is key to note is that the bond market is the tail that wags the stock market's dog—it leads."

Whether the bond market again is foretelling a bear market—a 20% drop in stocks from the most recent high—is part of a long-running debate over who does a better job forecasting—stock or bond investors. Conventional wisdom is that bond investors tend to be more conservative and thus less influenced by fear and greed. That's cited as the reason by some that the bond market does a better job of getting the economy right. "With all due respect to the stocks guys, the bond guys, when it comes to the economy, tend to sniff things out a little earlier and eventually get things right," says Mike Larson, analyst at Weiss Research. "Bond yield levels have given you key insight into what's going on in the economy. The verdict in my mind is pretty unmistakable."

The concern over what bond market movements portend for the economy come as Wall Street awaits word from the Federal Reserve on what its plans are to juice the economy. The FOMC meets Tuesday to discuss rates and possible future quantitative easing measures, though some think the central bank has become less an influence after three years of aggressive policy moves.

In the meantime, economic signs, particularly in employment and consumer and business sentiment, are progressively weakening, indicating that if deflation is not on the horizon, then strong economic growth is unlikely either.

Productivity Declines- Economy Slows

2010-08-10T09:05:00.000-04:00

U.S. non-farm productivity declined for the first time in 1-1/2 years during the second quarter this year and labor costs barely edged up, according to a Labor Department report on Tuesday that underlined a slowing pace of economic recovery. Productivity declined by an annual rate of 0.9% after rising at a revised 3.9% rate in the first quarter, the first time since the fourth quarter of 2008 that output per worker fell. Analysts surveyed by Reuters had forecast that productivity, a measure of hourly output per worker that is taken as an indicator of the economy's vitality or lack of it, would expand at a 0.2% annual rate in the second quarter and that unit labor costs would rise 1.3%.

Unit labor costs, a gauge of potential inflation pressures closely watched by the Federal Reserve, edged up at a 0.2% annual rate after shrinking at a revised 3.7% rate in the first three months this year. The weak productivity figure is in line with other broad signs that the economic recovery is losing momentum. The overall economy grew at only a 2.4% annual rate in the second quarter, down from a 3.7% rate in the first quarter.

Fed policymakers were holding a one-day meeting on Tuesday to consider interest-rate policy, but with rates already near zero the speculation was that the U.S. central bank may be mulling other fresh steps to stimulate the economy amid signs that inflation poses little or no current risk.

Tuesday's FOMC Meeting- Much Anticipated

2010-08-09T22:24:00.000-04:00

The Fed holds its regular, one-day meeting Tuesday and is expected, as always, to release a statement at around 2:15 p.m. But what it will say in that statement is at the heart of a debate among Wall Street's deeply divided economists over what steps, if any, the Fed will take. One view is that the Fed will embark on a new quantitative easing program, by reinvesting the proceeds of its maturing mortgage securities in Treasuries, or even more mortgages. Another group does not think the Fed would make such a move unless the economy significantly worsens later on. Yet, they all agree the Fed could give a nod to a weakening economy.

"That's the only story tomorrow," said Knight Equities managing director Peter Kenny of the Fed meeting.

"Earnings season" is winding down, and now the focus is going to revert back to the economy and frankly that's not particularly good," said Kenny. There are a few pieces of economic news ahead of the Fed meeting, including the NFIB small business survey at 7:30 a.m.; productivity and costs, at 8:30 a.m., and wholesale trade at 10 a.m.

Fed Could Downgrade Outlook for US

2010-08-09T12:12:00.000-04:00

The Federal Reserve is set to downgrade its assessment of US economic prospects when it meets on Tuesday to discuss ways to reboot the flagging recovery. Faced with weak economic data and rising fears of a double-dip recession, the Federal Open Market Committee is likely to ensure its policy is not constraining growth and to use its statement to signal greater concern about the economy. It is, however, unlikely to agree big new steps to boost growth.

Smaller measures to help the economy could initially take the form of a decision to reinvest proceeds from maturing mortgage-backed securities held by the US central bank, thereby preventing the Fed’s balance sheet from shrinking naturally.

Investors will also examine closely any changes to the pledge made by the FOMC in June to “employ its policy tools as necessary to promote economic recovery and price stability”, which could be hardened if policymakers choose to signal the potential for more aggressive move to boost the economy in the future. But even if that happens, most economists believe that it would take several more months of poor data for the Fed to actually begin a new round of asset purchases on the scale of those carried out during the recession.

In congressional testimony last month, Ben Bernanke noted “unusual uncertainty” in the economic outlook and in a speech last week the Fed chairman warned of a “considerable way to go” before the US achieves a full recovery. Although Fed policymakers still believe the basic trajectory of the economy remains one of moderate expansion, there may be more attention given to heightened dangers of a sharp slowdown.

SKT and FDO Will Continue Higher

2010-08-09T09:30:00.002-04:00

After we learned on Friday that unemployment has not really turned around yet, we need to look for companies that will prosper in a weaker economy. Tanger (SKT) and Family Dollar (FDO) are two names that come to mind, and both happen to be at 52 week highs.

Tanger Factory Outlet Centers (SKT)- The company is a fully-integrated, self-administered and self-managed real estate investment trust, which focuses on developing, acquiring, owning, operating and managing outlet shopping centers. SKT had good Q2 results and has raised their dividend 17 consecutive years. The company will continue to do well because consumers still want name brand items, but they cannot afford the name brand prices. This is when outlets thrive. Outlet are a way for companies to get rid of excess inventory, at very reduced prices.

Family Dollar (FDO)- The company operates a chain of more than 6,600 general merchandise retail discount stores in 44 states, providing consumers with a selection of merchandise in neighborhood stores. The Company’s merchandise assortment includes consumables, home products, apparel and accessories, and seasonal and electronics. Out of all the dollar stores I think this is the 'best of breed'. FDO recently announced Q3 earnings of $0.77/share compared with $0.62/share just one year ago. Family Dollar is taking all the right steps to continue this great growth. Although the dividend is small, FDO did raise it 15% this year, which is also a very positive sign.

Company	Symbol	Stock Price	52 Week Range
Tanger	SKT	45.27	33.79-46.51
Family Dollar	FDO	42.00	25.52-42.49

Why Market Rallied Friday

2010-08-07T23:51:00.001-04:00

Why, after such a bad jobs report on Friday (check out August 6th post for jobs report) did the broader market rally 1.3% off its lows of the day? The numbers missed analysts' expectations and the unemployment rate sits at 9.5%. What could possibly be positive about this?

My answer to why the market rallied has nothing to do with the economy; rather, it deals with the amount of cash that companies have on their balance sheets. The financial crisis allowed companies to issue debt, in the form of corporate bonds, at very low interest rates. Also, companies were able to take out large long term loans from banks at unbelievably low interest rates. This means that companies were able to raise tens-of-billions of dollars at a low cost to the company.

Companies have spent very little of this money, and shareholders are starting to get angry that they are not putting this money to work. I feel that companies will start to do one or two of the following three techniques to increase shareholder value, which would raise the stock price, and overall stock market.
1. Announce a dividend increase
2. Announce a share buyback program
3. Acquiring competitors
In my opinion, in the next couple months, the market will rally on large down days because investors think that these announcements could be coming soon, so they are buying on the dips.

Currently, the economy is still sick, but the stock market (in particular companies' balance sheets) is rather healthy. No one knows for sure how long the unemployment rate will remain at this level, but based on the health of the stock market, I think that you can buy the dips. Make sure you stay in high quality companies with consistent growth.

H.P. Board Ousted CEO on Friday

2010-08-07T15:51:00.001-04:00

Mark V. Hurd, who turned Hewlett-Packard (HPQ) into the world’s largest technology company on the back of fierce fiscal discipline, has been ousted from his post for the lowliest of corporate offenses — fudging his expenses.

H.P.’s board stunned Silicon Valley and Wall Street late Friday by announcing Mr. Hurd’s resignation as chairman and chief executive of the computing and printing giant, involving what it said was a “close personal relationship” with a contractor who helped with the company’s marketing.

The woman’s lawyer contacted the company in late June, charging sexual harassment. While the directors were investigating that charge, they found inaccurate expense reports that covered payments made to the woman. The directors said, however, that the sexual harassment charge was unsubstantiated. The board charged that Mr. Hurd, 53, failed to disclose his use of company funds. It urged Mr. Hurd to resign, but he balked and offered to compensate the company for the disputed funds, said to range from $1,000 to $20,000, according to a person close to Mr. Hurd who was briefed on the situation but was not authorized to speak publicly. The board, however, insisted. “This was a necessary decision,” said Marc L. Andreessen, a venture capitalist and a director.

Mr. Hurd’s actions “showed a profound lack of judgment,” said Michael Holston, executive vice president and general counsel whom Mr. Hurd had brought into the company in 2006 after he investigated a boardroom scandal involving company spying on board members, employees and journalists. That investigation ended with the resignation of the company’s chairman and the elevation of Mr. Hurd.

Jobs Data Not Pretty

2010-08-06T09:11:00.002-04:00

U.S. employment fell for a second straight month in July as more temporary census jobs ended while private hiring rose less than expected, pointing to an anemic economic recovery.

Non-farm payrolls fell 131,000 the Labor Department said on Friday as temporary jobs to conduct the decennial census dropped by 143,000. Private employment, considered a better gauge of labor market health, rose 71,000 after increasing 31,000 in June. In addition, the government revised payrolls for May and June to show 97,000 fewer jobs than previously reported. Analysts polled by Reuters had forecast overall employment falling 65,000 and private-sector hiring increasing 90,000.

The unemployment rate was unchanged at 9.5% in July for a second straight month, just below market expectations for a rise to 9.6 percent. The steady jobless rate largely reflected a drop in the labor force as discouraged workers gave up the search for jobs.

Job growth has taken a step back after fairly strong gains between February and April, putting in jeopardy the economy's recovery from its worst downturn since the 1930s. Growing unease over the health of the economy is weighing on President Barack Obama's popularity and hurting the Democratic Party's prospects of keeping control of Congress in November's mid-term elections.

The state of the labor market is one of the factors that will determine the timing of the Federal Reserve's first interest rate rise since reducing overnight lending rates to near zero in December 2008.

Important Job's Report Tomorrow, August 6th

2010-08-05T19:51:00.000-04:00

US private sector employers likely added about 100,000 jobs in the month of July, but a new round of state and local government layoffs may add new weight to the jobless rate.

Economists expect the loss of 65,000 non-farm payrolls and a slightly higher unemployment rate of 9.6%, when the July employment report is released at 8:30 am Friday. Within that number, they expect to see the reduction of more than 100,000 temporary workers hired for the US census, but there may also be tens of thousands of new job losses among state and local government workers.

"We could get some surprises because we're starting to get the pink slips at the state and local level," said Diane Swonk, chief economist at Mesirow Financial. Swonk said there are estimates that local governments could furlough as many as 500,000 workers in the next two years.

Economists say this is the time of year, typically, when public school teachers are let go; and that number will be much larger than usual this year. The teachers will also be joined by other state and municipal workers, as local governments struggle with budget shortfalls.

Barclays Capital chief US economist Dean Maki expects to see 30,000 state and local government layoffs, but he also expects the private sector to add 125,000 workers. His estimate is for a total loss of 50,000 payrolls, including 145,000 from the decline in census workers. "There is still a lot of caution among firms, and worries about whether this is going to be a sustainable recovery. As those concerns fade, we believe the numbers will be firming. We look for job growth in the fourth quarter of 150,000 in total and next year, we expect it to be averaging more than 200,000 per month," said Maki.

Job creation has been one of the biggest disappointments in the current recovery, and economists expect to see a continued drag on the consumer until hiring picks up.

Buy Whats Working- Auto Parts Stores

2010-08-05T09:18:00.000-04:00

Although the stock market is much higher than its recessionary lows of March 2009, the economy has yet to really follow suit. The unemployment rate maybe off its recent high of 10.6%, but it still sits at 9.6%- far from good. For this reason, the auto parts stores have done extremely well the past couple of years. This is for two main reasons. First, the consumer is now starting to fix their own vehicles. Car owners can save a lot of money by performing simple tasks, like changing the oil, as compared with taking the car into a service center. Second, people cannot afford to purchase a new or better used car; so, they are forced to continually fix their broken down cars. I do not see this trend ending anytime soon. Even if the unemployment rate turns around, people will still continue to do the DIY work because they saw how much money they saved. There is a reason that all auto parts stores' stock prices are near a 52 week high. The consumer is not totally dead, they are just being very selective on how and where they spend their money. In my opinion, the consumer will continue to buy from the auto parts stores as a way to save money.

My favorite plays are AutoZone (AZO), O'Reilly Automotive (ORLY), and Advanced Auto Parts (AAP).

Company	Symbol	Stock Price	52 wk Range
AutoZone	AZO	205.76	135.13-213.65
O'Reilly Automotive	ORLY	47.75	33.61-51.70
Advanced Auto Parts	AAP	53.36	36.11-55.78

42,000 Private Sector Jobs Added in July

2010-08-04T08:55:00.000-04:00

The private sector created 42,000 jobs in July, helped primarily by a big surge in the service sector, a report Wednesday from ADP and Macroeconomic Advisors showed. The ADP calculations coupled with another report showing layoff activity slowing helped to provide a slightly more optimistic picture of the US jobs market. Planned layoffs rose 6% in July to 41,676, but downsizing activity stayed at its lowest level since before the 2001 recession, global consulting firm Challenger, Gray & Christmas said Wednesday.

Job cuts remain well below the pace of last year, with the total for July about 57% lower than planned layoffs announced in the year-ago period. Overall, there are 64% fewer job cuts announced so far this year—339,353—compared with the planned layoffs recorded in the first seven months of last year, according to Challenger, Gray & Christmas. "It is true that job cuts have increased in each of the past three months," John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. "However, the increases are so slight and the monthly totals so low when compared to recent years, that the trend in no way suggests a reversal of the significant slowdown in job-cut activity witnessed over the past year."

The government was the biggest sector to shed jobs for the fourth time in 2010. It announced plans to lay off 7,193 workers last month, 36% higher than in June. "This sector has the biggest potential for additional job-cut spikes between now and the end of the year," John Challenger said.

The government and non-profit sector plans to eliminate 105,969 jobs this year. The second-biggest job-cutting sector is the pharmaceutical industry, with 37,010 cut planned, 30% lower than in the first seven months of 2009.

Info from cnbc.com

Pending Home Sale Down 2.6% in June

2010-08-03T11:18:00.000-04:00

Contracts for pending sales of previously owned U.S. homes fell to a record low in June as buyers sat on the sidelines, a survey from the National Association of Realtors showed on Tuesday. The Realtors said its Pending Home Sales Index, based on contracts signed in June, fell to a record low 75.7 from a revised 77.7 in May. Economists polled by Reuters had expected a rise of 0.6%.

"We really need to see stronger job creation to have a meaningful recovery in the housing markets," said NAR chief economist Lawrence Yun, adding "there could be a couple of additional months of slow home-sales activity before picking up later in the year" if the job market improves.

The June decline followed a 30% drop in May after a popular tax credit expired at the end of April. The index was 18.6% lower than in June 2009 and fell in three of four regions compared to the prior month. Contracts rose 3.7% in the South, the country's largest region, but dropped by 0.2% in the West, by 12.2% in the Northeast and by 9.5% in the Midwest.

Procter & Gamble Earnings Miss

2010-08-03T08:36:00.000-04:00

Procter and Gamble's (PG) fourth-quarter net income fell 12 percent, while sales rose as the maker of Tide and Pampers stepped up marketing and new product development, and PG projected more sales growth for the year ahead.

The company says it has been spending more on innovation and marketing. It has boosted sales in a tough economy with price cuts, cheaper versions and upgraded premium products of its big-name brands, and more advertising. Foreign exchange impacts also undercut profits in the quarter, PG reported Tuesday.

The Cincinnati-based consumer products giant says it earned $2.2 billion, or 71 cents per share, down from nearly $2.5 billion, or 80 cents a share, a year prior. Revenue increased 5 percent to $18.9 billion. Analysts expected 73 cents a share on $19.1 billion in revenue. Organic sales, a key measure that excludes currency fluctuations, acquisitions and other such changes, grew 4 percent for the quarter and 3 percent for the year.

PG totaled $78.9 billion in sales for its fiscal year, up 3 percent. PG expects more sales growth in the coming year, projecting organic sales up 4 to 6 percent with net sales up 2-4%

The company expects earnings in a range of $3.91 to $4.01. Analysts surveyed by Thomson Reuters expect $3.98 on average. For the current quarter, P&G expects revenue to grow between 1 and 3 percent.

Adjusted for discontinued businesses, acquisitions and foreign exchange effects, it expects revenue to grow between 3 and 5 percent, with earnings of 97 cents to $1.01 per share. Analysts expect $1.04.

"The investments we've made in innovation, marketing support and consumer value have delivered accelerating unit volume and profitable market share growth throughout the year, which are clear indications that our strategy is working," Bob McDonald, president, CEO and chairman, said in a statement.

First Move Monday- Buy Goodyear

2010-08-02T08:37:00.000-04:00

On Thursday, Goodyear (GT) reported great earnings. Goodyear reported net income of $28 million, or 11 cents per share, for the second quarter, compared with a net loss of $221 million, or 92 cents per share, a year earlier. Revenue rose 15 percent to $4.5 billion. Yet, shares of GT sold off sharply on Thursday and Friday. Why- because investors are worried that an economic slowdown could hurt earnings in the second half of the year. Really? GT does a lot of business in Europe. These second quarter earnings include the time when everyone was worried that a bunch of countries in Europe, ie Spain, Greece, etc, would need to be bailed out. Its not like the economy in the US has turned around much either in the past quarter, and yet, investors sell this stock into great earnings. I think you buy some on Monday and sit on it for a year. GT is going to have much better numbers over the next year than analysts expect.

Goodyear (GT) 10.67 52wk 9.65-18.84

Possible End to Deepwater Drilling Moratorium

2010-08-01T10:07:00.000-04:00

The U.S. House of Representatives Friday voted to end the federal moratorium on deepwater drilling for oil companies that meet new federal safety requirements.

The proposal to end the moratorium was an amendment to a pending energy bill the House was poised to vote on. The moratorium will not end unless the Senate also votes to terminate it and President Barack Obama signs the legislation into law. The fate of the proposal in the Senate is uncertain.

The Obama administration imposed the six-month moratorium on exploratory drilling in waters more than 500 feet deep in response to the BP oil spill. The moratorium runs through the end of November.

"An indiscriminate blanket moratorium punishes the innocent along with the guilty for the actions of the poor judgment of one reckless company,'' said Rep. Charlie Melancon, a Louisiana Democrat who co-sponsored the amendment.

"If a rig meets all the tough new safety requirements issued by the Department of Interior, if it has been fully inspected and deemed safe, why should it sit idle? And the workers of that rig, why should they go jobless until the arbitrary six-month period is over?'' he said.

Come Monday morning, this news could help to boost some offshore drilling companies- APA, RIG, etc.

Markets Now Need Economic Numbers to Improve

2010-07-31T15:45:00.000-04:00

Economic reports on jobs, manufacturing and the consumer could be what trips up stocks in the week ahead, deflating some of July's 7 percent gain. More than 100 of the S&P 500 companies report earnings. Investors may, however, pay more attention to any other measure that casts light on the strength of the economy or the consumer, including Tuesday's important monthly auto sales. The July employment report, released Friday, is the most important economic report.

"We're going to lose that catalyst we had, which was better than expected earnings," said Jefferies managing director Art Hogan. "The problem is we've run out of steam."

"We probably will have more inclination to be concerned about the pace of the economy and will trade off on it," said Hogan. "...If we're shifting our focus to economic data versus earnings, the tendency of that has been to be a negative catalyst rather than a positive catalyst."

The S&P 500 companies reporting so far have seen quarterly profit increases of 45 percent on average. Of those companies, 75 percent topped earnings estimates and 64 percent beat revenue expectations. A mix of consumer, media, insurers and financial companies dominate the coming week's calendar.
Stocks in the past month have seen an earnings bounce, as they struggled against a patch of weaker economic reports. The market was nearly flat Friday, overcoming an initial sell off after second quarter GDP of 2.4 percent disappointed some investors and sent economists to work adjusting their second half forecasts.

Mark Zandi of Moody's Economy.com is one of those looking to revise his third quarter GDP forecast, and he may trim it to under 2 percent. "One very big concern was a very large contribution of inventories to Q2 and that sets us up for a soft Q3. That's consistent with the idea the economy is growing but still below trend, and that gets to the employment report of next week," he said. Zandi expects a decline of 50,000 non farm payrolls for July, including the elimination of 150,000 government census workers. He expects to see private payrolls grow by 100,000. In June, the economy added 41,000 non farm payrolls.

Stephen Stanley, chief economist at Pierpont Securities, expects a decline of 100,000, including a reduction of about 150,000 census workers. He said some consumer driven data in the coming week may show some signs of improvement. "June was clearly a very soft month for the economy. My sense is July is better. The reports on auto sales are going to be up for the month...The weekly numbers suggest consumers were spending at the mall again," he said.

GDP Up 2.4%

2010-07-30T10:01:00.000-04:00

U.S. economic growth slowed in the second quarter as a capital investment drive by businesses sucked in imports at the fastest pace since the first quarter of 1984.

Gross domestic product expanded at a 2.4 percent annual rate, the Commerce Department said in its first estimate on Friday, after an upwardly revised 3.7 percent growth pace in the January-March quarter.

Analysts polled by Reuters had forecast GDP, which measures total goods and services output within U.S. borders, growing at a 2.5 percent rate in the second quarter. The government had previously estimated a 2.7 percent growth rate for the first three months of this year.

"The anticipated slowdown in the economy is happening. Will business investment fall off a cliff next quarter if domestic consumer spending continues to flag?" said Lee Olver, managing director of financial strategies at Madison Williams & Co. in Houston.

The economy, which is digging out of its longest and deepest recession since the 1930s, has now grown for four straight quarters. However, growth has been too tepid, making little impact on a high unemployment rate.

The sluggish economy and a 9.5 percent unemployment rate are eroding President Barack Obama's popularity and dimming Democrats' prospects in November's mid-term elections. A Reuters-Ipsos poll this week showed only a 34 percent approval of Obama's handling of the economy and jobs compared to 46 percent who deemed it unsatisfactory. This is a sharp decline from early 2009, shortly after he took office, when more than half of those surveyed approved of Obama's handling of the worst financial crisis in decades.

In other economic news, a report showed that business activity in the Midwest was stronger than expected in July.

Growth in the last quarter was held back by a 28.8 percent surge in imports, which eclipsed a 10.3 percent rise in exports. The widening trade deficit lopped off 2.78 percentage points from growth, the largest subtraction since the third quarter of 1982. While the import surge subtracted from GDP, growing imports and robust business spending suggest strength in underlying demand.

2010 Q2 Earnings Reports- Friday, July 30th

2010-07-29T23:00:00.001-04:00

Before the Bell

Chevron (CVX)- Oil Company
Q2	Actual	Estimate	Year Ago
EPS	$2.70	$2.44	$0.87
Revenue	$53.00 B	$52.53 B	$40.21 B

Merck (MRK)- Drug Manufacturer
Q2	Actual	Estimate	Year Ago
EPS	$0.86	$0.83	$0.83
Revenue	$11.35 B	$11.45 B	$5.90 B

Simon Properties (SPG)- Real Estate Company
Q2	Actual	Estimate	Year Ago
EPS	$0.52	$0.46	($0.08)
Revenue	$934 M	$917 M	$904 M

Weyerhaeuser (WY)- Timber Company
Q2	Actual	Estimate	Year Ago
EPS	$0.20	$0.14	($0.59)
Revenue	$1.81 B	$1.68 B	$1.39 B

AsiaInfo- Oversold, Take Advantage

2010-07-29T11:36:00.005-04:00

Shares of AsiaInfo Holdings (ASIA) fell 23 percent in the first hour of trading on Thursday, following the release of 2010 Q2 earnings. The company reported in-line top line growth but missed EPS target of $0.36 by 7 cents.

Looking at the cold numbers, AsiaInfo Holdings (ASIA) doesn't look as bad. The company reported revenues of $65.6 million for the second quarter, an increase from previous quarter. But the problem is with earnings per share or EPS. The company delivered GAAP earnings of $0.29/share vs. consensus estimates of $0.36/share.

Another difficulty is the interpretation of the outlook. The company will consolidate books of Linkage as of the next quarter, throwing off current growth chart. These two handicaps certainly contribute to the twenty plus percent drop in stock value. The intergation of Linkage is definitely costing ASIA much more than the comapny and analysts first expected, but this acquisition will help in the long haul.

I say that you can buy a little of ASIA right here. The stock has traded sideways for the past one and a half hours- which appears could be a bottom in today's trading.

AsiaInfo (ASIA) 20.01 -5.99(-23.02%) 52wk 15.55-32.60

Take a Look at K and CL

2010-07-29T09:44:00.003-04:00

There were very mixed earnings reports this morning, but the market seems to only be listening to the good reports as the major averages opened higher today. Both Kellogg (K) and Colgate-Palmolive (CL) lowered their full year earnings estimates. This is interesting because these companies are supposed to be recession resistant, but they seem to be struggling in this environment.

Colgate-Palmolive's (CL) second-quarter earnings rose to $1.17/share from $1.07 in the year-ago period. Net sales climbed to $3.81 billion from $3.76 billion. Analysts polled were looking for $1.17/share on sales of $3.95 billion. The consumer-products company also lowered its full-year earnings estimate due to currency related losses.

Kellogg (K), the cereals giant, cut its full-year forecast after reporting second-quarter earnings that fell below analysts expectations. Kellogg said second-quarter profit fell to 79 cents a share from 92 cents a year earlier. Sales dropped to $3.06 billion from $3.23 billion. Analysts estimated profit of 94 cents a share on sales of $3.29 billion.

These were disappointing reports, but historically these companies have given investors a great return on investment. Both K and CL raise their dividend on an annual basis and historically their increase in stock price has easily beat the S&P 500. Over the past 10 year, the S&P 500 is down 21.5%; while K is up 88% and CL up 40.5%. In my opinion, these are two well run companies that have hit a little rough patch. If you have a long term perspective on stocks, this could be a good time to start building a position in these names. For the record, I do prefer K over CL. Historically its the better performer and pays a better dividend.

Kellogg (K) 49.09 -2.43(-4.72%) 52wk 45.58-56.00
Colgate-Palmolive (CL) 78.30 -5.56(-6.63%) 52wk 70.45-87.39

2010 Q2 Earnings Reports- Thursday, July 29th

2010-07-28T22:21:00.002-04:00

Before the Bell

Exxon Mobil (XOM)- Oil Company
Q2	Actual	Estimate	Year Ago
EPS	$1.60	$1.46	$0.84
Revenue	$92.49 B	$98.49 B	$74.46 B

AstraZeneca (AZN)- Drug Company
Q2	Actual	Estimate	Year Ago
EPS	--	$1.60	$1.64
Revenue	--	$8.13 B	$7.96 B

Kellogg (K)- Cereal Maker
Q2	Actual	Estimate	Year Ago
EPS	$0.89	$0.94	$0.92
Revenue	$3.06 B	$3.29 B	$3.23 B

Sony (SNE)- Electronics Maker
Q2	Actual	Estimate	Year Ago
EPS	$0.29	($0.15)	($0.39)
Revenue	$18.66 B	$18.76 B	$16.67 B

Southwest Air (LUV)- Airline
Q2	Actual	Estimate	Year Ago
EPS	$0.29	$0.27	$0.08
Revenue	$3.17 B	$3.15 B	$2.62 B

After the Bell

Amgen (AMGN)- Biotechnology Company
Q2	Actual	Estimate	Year Ago
EPS	$1.38	$1.30	$1.29
Revenue	$3.80 B	$3.74 B	$3.71 B

Expedia (EXPE)- Travel Booking Website
Q2	Actual	Estimate	Year Ago
EPS	$0.44	$0.42	$0.38
Revenue	$834 M	$845 M	$770 M

MetLife (MET)- Insurance Company
Q2	Actual	Estimate	Year Ago
EPS	$1.23	$1.00	$0.88
Revenue	$12.80 B	$13.05 B	$12.23 B

Moody's Outlook Negative on Financials

2010-07-28T12:57:00.000-04:00

On Tuesday, Moody's changed its outlook on Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC) to negative, from stable, citing lessened government support for the institutions under new U.S. regulations. A negative outlook indicates the banks are more likely to be downgraded over the next 12 to 18 months. The credit ratings agency also said it may cut its ratings on ten regional banks on reduced government support.

Moody's has boosted its debt and bank deposit ratings on large financial institutions since early 2009 on the assumption that they would receive government support in a time of trouble because of the risks they pose to other financial firms and the economy as a whole. The new financial reform bill, however, is intended "clearly to eliminate government—i.e. taxpayer-support to creditors," Moody's said. Some support, however, is likely to remain for large institutions as regulators work to implement new laws, it added. "Over the next 12 to 24 months ... we expect that our support assumptions for systemically important banks will likely revert to pre-crisis, or even lower, levels—though we do not anticipate that we would completely eliminate support from these firms' senior debt and deposit ratings," Moody's said.

Moody's rates Bank of America's senior debt A2, the sixth highest investment grade, Citigroup A3, the seventh highest investment grade and Wells Fargo A1, the fifth highest investment grade. Moody's also said it may downgrade subsidiaries of BB&T, Fifth Third, KeyCorp, PNC, Popular, Regions Financial, SunTrust Banks, US Bancorp, and Zions Bancorp.

Expect a Market Sell-Off

2010-07-28T10:24:00.002-04:00

After four days of having the broader market indexes (DJIA, S&P 500, NASDAQ) up nearly 4.5%, I expect there to be some profit taking over the next couple of days. With lackluster earnings reports from Boeing (BA), Aetna (AET), and others, as well as a durable goods number falling short of estimates as demand remains weak, it could be the catalysts traders were looking for to take some profits. And I personally do not think this, but many traders still feel that a double dip recession is very likely. The one metric that has me worried is the Treasury market. Yesterday, a two year Treasury auction supposedly went better than expected, but still its the lowest yield ever on a two year Treasury- with a 0.665% return. This auction shows, that even though the stock market has had a nice rally the past few days and Q2 earnings have been much better than expected, investors are still very cautious. Like I said, I do not think we will have a double dip recession, but I do feel a pull back in the stock market will happen. So, I would not commit new capital into this market right now- wait for the market to sell-off. I think you could see 2.5%-3.5% shaved off this market over the next 3-5 trading days. Also, this sell-off may be delayed if we do have a collection of good earnings before the bell someday this week.

2010 Q2 Earnings Reports- Wednesday, July 28th

2010-07-27T22:27:00.002-04:00

Before the Bell

Boeing (BA)- Aerospace Company
Q2	Actual	Estimate	Year Ago
EPS	$1.06	$1.01	$1.41
Revenue	$15.57 B	$16.13 B	$17.15 B

Allegheny (ATI)- Iron and Steel Manufacturer
Q2	Actual	Estimate	Year Ago
EPS	$0.36	$0.37	$0.03
Revenue	$1.05 B	$954 M	$710 M

Corning (GLW)- Diversified Technology Company
Q2	Actual	Estimate	Year Ago
EPS	$0.58	$0.52	$0.39
Revenue	$1.71 B	$1.65 B	$1.40 B

Dominion (D)- Electricity Company
Q2	Actual	Estimate	Year Ago
EPS	$0.72	$0.67	$0.68
Revenue	$3.33 B	$3.47 B	$3.45 B

WellPoint (WLP)- Healthcare Company
Q2	Actual	Estimate	Year Ago
EPS	$1.67	$1.55	$1.50
Revenue	$14.22 B	$14.60 B	$15.27 B

After the Bell

Akamai (AKAM)- Internet Service Company
Q2	Actual	Estimate	Year Ago
EPS	$0.34	$0.34	$0.40
Revenue	$245.3 M	$243 M	$205 M

O'Reilly Automotive (ORLY)- Autoparts Store
Q2	Actual	Estimate	Year Ago
EPS	$0.71	$0.74	$0.63
Revenue	$1.38 B	$1.35 B	$1.25 B

Visa (V)- Credit Card Company
Q2	Actual	Estimate	Year Ago
EPS	$0.97	$0.93	$0.67
Revenue	$2.03 B	$1.97 B	$1.65 B

Good Housing Data- Buy Home Depot

2010-07-27T10:10:00.003-04:00

After the home buyer tax credit expired, the housing data plummeted, dropping even more than analysts expected during the months that followed. Recently though, the housing data has turned around. Yesterday, new home sales rose sharper than expected, and this morning, home prices rose more than expected in May. It may still be to early to buy the homebuilders since they are competing with tens of thousands of foreclosures- which are far cheaper in price than a new home. A much safer way to play this good housing data is with Home Depot (HD). HD management has done a great job turning this company around. Its now a much leaner company, and the costumer service is far better than is was even five years ago. Last time HD reported earnings, the company beat estimates and rose their FY 2010 guidance. How about Lowe's (LOW), HD's main competitor. Last time LOW reported earning, the company's earning were below estimates, and the guidance was on the lower end of estimates. HD has a track record of paying a good dividend, which they raised at the beginning of this year. The company announced a share buyback program last time they reported- I am sure they are taking advantage of these depreciated prices. The stock is well off its 52 week high of 37.03, currently at 29.30. HD has not announced when they will release Q2 earnings, but it should be around the middle of August. This is a great company- well run- and seems to be making all the right moves.

HD 29.03 52wk 24.47-37.03

2010 Q2 Earnings Reports- Tuesday, July 27th

2010-07-26T23:22:00.002-04:00

Before the Bell

DuPont (DD)- Chemical Company
Q2	Actual	Estimate	Year Ago
EPS	$1.17	$0.93	$0.61
Revenue	$8.62 B	$8.23 B	$6.86 B

BP (BP)- Oil Giant
Q2	Actual	Estimate	Year Ago
EPS	--	$1.42	$0.94
Revenue	--	$72.60 B	$56.56 B

Lockheed Martin (LMT)- Defense Contractor
Q2	Actual	Estimate	Year Ago
EPS	$1.96	$1.93	$1.90
Revenue	$11.44 B	$11.48 B	$11.24 B

Under Armour (UA)- Athletic Apparel
Q2	Actual	Estimate	Year Ago
EPS	$0.07	$0.03	$0.03
Revenue	$204.8 M	$190 M	$165 M

US Steel (X)- Steel Manufacturer
Q2	Actual	Estimate	Year Ago
EPS	$0.45	$0.63	($3.28)
Revenue	$4.68 B	$4.63 B	$2.13 B

Western Union (WU)- Money Transfer Company
Q2	Actual	Estimate	Year Ago
EPS	$0.37	$0.32	$0.31
Revenue	$1.27 B	$1.28 B	$1.25 B

After the Bell

Aflac (AFL)- Insurance Company
Q2	Actual	Estimate	Year Ago
EPS	$1.35	$1.33	$1.20
Revenue	$5.07 B	$4.99 B	$4.31 B

Aetna (AET)- Healthcare Company
Q2	Actual	Estimate	Year Ago
EPS	$0.75	$0.74	$0.68
Revenue	$8.50 B	$8.49 B	$8.67 B

Norfolk Southern (NSC)- Railroad
Q2	Actual	Estimate	Year Ago
EPS	$1.04	$0.99	$0.60
Revenue	$2.43 B	$2.40 B	$1.86 B

VVUS Turned into a Nice Trade

2010-07-26T09:58:00.000-04:00

On July 16, Vivus' stock price got cut in half when its new weight loss drug, Qnexa, was rejected by a count of 9-7 by an FDA panel. I said you could buy it because it has a descent pipeline, including an ED drug in Phase III testing. Also they have several investigational product candidates in late stages of clinical development. I said you could buy at 5.20/share and look for about a 10% bounce. Initially, the stock continued to sell off, but we got the bounce we were looking for. It reached a high of 6.04/share on July 22. I called it quits on this stock this morning at the open at 5.75/share. No reason in staying in this volatile stock any longer, we got the 10% bounce.

Trade dates: July 16, 2010-July 26, 2010
Bought: 5.20/share
Sold: 5.75/share
Gain: +0.55/share
% Gain: +10.58%

Look at ESRX and TEVA

2010-07-26T09:33:00.000-04:00

On Friday afternoon, I told said that you could buy into this rally- specifically saying that McDonald's is a good buy on the pullback. At the end though, I said to take a look at Express Scripts (ESRX) and Teva Pharmaceutical (TEVA)- both have been beaten down lately.

ESRX- The Company operates in two business segments: PBM and Emerging Markets. The PBM segment consists of retail network pharmacy management and retail drug card programs, home delivery services, benefit plan design and consultation, etc. The EM segment consists of distribution of pharmaceuticals and medical supplies to providers and clinics, etc. This stock, like most healthcare stock have been sold off. I think its way over done. This is a growth company that shows no sign of slowing down.

TEVA- A global pharmaceutical company that develops, produces and markets generic drugs covering all treatment categories. This stock is just off a 52 week low, and I think its an opportunity to buy into a great company. Friday, the FDA OK'd a generic version of Sanofi-Aventis' (SNY) blood clot treatment Lovenox, boosting shares of Momenta (MNTA). TEVA also is seeking to make a generic version. The FDA decision was seen as a sign the FDA is willing to approve a generic version of Teva's multiple sclerosis drug, Copaxone, as well as other complex biological drugs. I see this as a positive catalyst for the stock, not a reason to sell.

ESRX opened at 43.08/share
TEVA opened at 50.59/share

$250,000 Bank Insurance Now Permanent

2010-07-25T23:00:00.000-04:00

President Barack Obama signed the new Financial Reform bill Wednesday, and one immediate change will be the current $250,000 limit on FDIC insurance for bank deposits and NCUA Insurance for Credit Union (CU) deposits becomes permanent. That’s great news.

Without this new law the $250,000 per-bank or credit union limit would have expired at the end of 2013 and we would have reverted to the old standard $100,000 per bank or CU limit on deposit insurance coverage. That means you no longer have to be careful about putting more than $100,000 in a long-term CD that would mature after 2013. Now you can keep up to $250,000 on deposit for any amount of time.

That said, I wouldn’t necessarily rush to tie up big amounts of money in a long-term CD right now. With rates so low, that’s a long time to lock in a low rate. Better to keep your deposits shorter-term so you always have some money coming due that you can reinvest at higher rates. It may not happen this month, or during this year, but rates will indeed rise.

US Officials: BP CEO Hayward is Out

2010-07-25T17:12:00.002-04:00

BP denies its embattled chief executive Tony Hayward will resign this week, as the company prepares to report its largest ever quarterly loss due to the Gulf oil spill. But US officials confirmed weekend buzz that the embattled CEO is on his way out. They said they were brief by a senior BP representative last week that Hayward would be stepping down.

The reports were swirling all weekend about Hayward's demise. Citing unnamed sources, UK newspaper The Sunday Times reported that BP's board will decide on Hayward's fate when it meets on Monday. And the Wall Street Journal reported that the company is getting close to naming American Bob Dudley, who has been heading up the company's Gulf spill response, to succeed Hayward.

A BP spokesperson confirmed only that the board is meeting ahead of the company's second quarter earning announcement on Tuesday, but clarified that the meeting is standard procedure — not a special meeting to discuss Hayward's fate. "Tony Hayward is our chief executive and has the full support of the board and management," the spokesperson said. "We don't comment on speculation." The company similarly refutes any speculation its chairman, Carl-Henric Svanberg may resign. It has been widely speculated BP will move to replace its top leadership once the company permanently caps the ruptured Macondo well in the Gulf of Mexico in order to begin a new chapter.

BP (BP): 36.86 52wk 26.75-62.38

2010 Q2 Earnings Reports- Monday, July 26th

2010-07-25T10:08:00.010-04:00

Before the Bell

Enterprise Products (EPD)- Manufacturer of Pipelines
Q2	Actual	Estimate	Year Ago
EPS	$0.46	$0.44	$0.32
Revenue	$7.54 B	$8.00 B	$3.51 B

Lorillard (LO)- Tobacco Company
Q2	Actual	Estimate	Year Ago
EPS	$1.73	$1.61	$1.71
Revenue	$1.04 B	$1.01 B	$1.03 B

Alcon (ACL)- Medical Supplies Company
Q2	Actual	Estimate	Year Ago
EPS	$2.21	$2.03	$1.94
Revenue	$1.89 B	$1.83 B	$1.68 B

After the Bell

Legg Mason (LM)- Investment Services Company
Q2	Actual	Estimate	Year Ago
EPS	$0.30	$0.31	$0.35
Revenue	$674 M	$652 M	$613 M

Wall Street Blogger Returns Report

2010-07-23T18:11:00.003-04:00

Date Call was Made	Symbol	Recommended Purchase Price	Current Price	Gain/Loss	% Gain/Loss
6/27/2010
Citigroup	C	3.94	4.02	0.08	2.03%
6/29/2010
Altria	MO	19.96	22.12	2.16	10.82%
Dr Pepper Snapple	DPS	37.79	39.82	2.03	5.37%
Home Depot	HD	28.63	28.25	-0.38	-1.33%
Eli Lilly	LLY	33.75	35.17	1.42	4.21%
Magellan Midstream Part.	MMP	46.19	49.70	3.51	7.60%
Waste Management	WM	31.46	33.59	2.13	6.77%
Proctor & Gamble	PG	60.32	61.91	1.59	2.64%
Johnson & Johnson	JNJ	59.24	57.63	-1.61	-2.72%
Verizon	VZ	28.62	28.02	-0.60	-2.10%
7/13/2010
Chipotle Mexican Grill	CMG	142.76	145.50	2.74	1.92%
Dr Pepper Snapple	DPS	39.16	39.82	0.66	1.69%
7/14/2010
Apple	AAPL	250.37	259.92	9.55	3.81%
7/16/2010
Bank of America	BAC	14.36	13.74	-0.62	-4.32%
Citigroup	C	3.99	4.02	0.03	0.75%
Vivus	VVUS	5.20	5.75	0.55	10.58%
7/23/2010
Netflix	NFLX	103.56	107.70	4.14	4.00%
McDonald's	MCD	69.69	69.90	0.21	0.30%
Express Scripts	ESRX	42.75	43.07	0.32	0.75%
Teva Pharmaceutical	TEVA	49.16	49.38	0.22	0.45%

Buyer of This Rally

2010-07-23T13:55:00.002-04:00

After digesting the European Stress Test, which had numbers that seemed to be too good (maybe the test was not as difficult as it should have been), the market has rallied rather aggressively. The rally seems real: true buy volume, volatility index is declining, and treasuries are selling off. For these reasons, I would be a buyer this afternoon. I really like McDonald's right now. MCD (69.64 -1.76) reported this morning- EPS and revenue beat expectations but the street was looking for a little more out of the company. MCD is a consistent growth company, well run, and pays a good dividend. I say you buy on this dip. What else to buy into the close:

McDonald's (MCD): 69.69 -1.70(-2.39%)
Express Scripts (ESRX): 42.75 +0.63(+1.50%)
Teva Pharmaceutical (TEVA): 49.16 -4.81(-8.91%)

First Move Friday Morning

2010-07-23T00:12:00.001-04:00

Netflix (NFLX) dropped 13.45% or -$16.09 to $103.56 after the video-subscription service provider reported Q2 earnings Wednesday after the bell. NFLX added another million customers during the spring, boosting its second quarter revenues 27% to $519.8 million from $408.5 million a year ago. Net income in the quarter rose 34% to $43.5 million or 80 cents per diluted share compared to net income of $32.4 million or 54 cents per share a year ago. The problem was its revenue, which analysts were expecting to be at $524 million (was $519.8 million). I think this is a good opportunity to buy NFLX. This sell-off is a bit over done.

NFLX raised its FY 2010 expectations. The company expects revenue to be in the range of $2.11-$2.16 billion, up from $2.05-$2.11 billion, GAAP net income to be in the range of $132-$144 million, up from $125-$137 million and GAAP EPS to be in the range of $2.41-$2.63, up from $2.28-$2.50. I think that these numbers are a bit conservative. Companies are being cautious in their second half guidance; there is no reason to be too optimistic right now. NFLX slightly rose their guidance- I think this means they are fairly optimistic about the second half of the year, but they don't want to overexcite investors and then possibly disappoint later down the road.

I think you can start building a position at these levels. This stock is way over sold- buy some NFLX Friday.

2010 Q2 Earnings Reports- Friday, July 23rd

2010-07-22T23:44:00.008-04:00

Before the Bell

McDonald's (MCD)- Fast Food Chain
Actual EPS/Revenue: $1.13/$5.95 B
Estimate EPS/Revenue: $1.12/$5.91 B
Year Ago EPS/Revenue: $0.97/$5.65 B

Verizon (VZ)- Telecommunications Company
Actual EPS/Revenue: $0.58/$26.77 B
Estimate EPS/Revenue: $0.56/$27.11 B
Year Ago EPS/Revenue: $0.63/$26.86 B

Ford (F)- Automaker
Actual EPS/Revenue: $0.68/$31.30 B
Estimate EPS/Revenue: $0.40/$29.80 B
Year Ago EPS/Revenue: ($0.21)/$27.20 B

Honeywell (HON)- Technology and Manufacturing Co.
Actual EPS/Revenue: $0.60/$8.16 B
Estimate EPS/Revenue: $0.57/$8.00 B
Year Ago EPS/Revenue: $0.60/$7.57 B

Ingersroll-Rand (IR)- Diversified Industrial Firm
Actual EPS/Revenue: $0.76/$3.70 B
Estimate EPS/Revenue: $0.72/$3.67 B
Year Ago EPS/Revenue: $0.50/$3.47 B

Kimberly-Clark (KMB)- Health/Hygiene Products Maker
Actual EPS/Revenue: $1.20/$4.86 B
Estimate EPS/Revenue: $1.13/$4.95 B
Year Ago EPS/Revenue: $0.97/$4.73 B

Johnson Controls (JCI)- Auto Parts Manufacturer
Actual EPS/Revenue: $0.54/$8.54 B
Estimate EPS/Revenue: $0.55/$8.48 B
Year Ago EPS/Revenue: $0.25/$6.98 B

2010 Q2 Earnings Reports- Thursday, July 22nd

2010-07-21T22:09:00.002-04:00

Before the Bell

Lilly (LLY)- Pharmaceutical Firm
Actual EPS/Revenue: $1.24/$5.75 B
Estimate EPS/Revenue: $1.10/$5.58 B
Year Ago EPS/Revenue: $1.12/$5.29 B

AT&T (T)- Telecommunications
Actual EPS/Revenue: $0.61/$30.81 B
Estimate EPS/Revenue: $0.57/$30.90 B
Year Ago EPS/Revenue: $0.54/$30.73 B

Caterpillar (CAT)- Construction Equipment Maker
Actual EPS/Revenue: $1.09/$10.41 B
Estimate EPS/Revenue: $0.85/$9.80 B
Year Ago EPS/Revenue: $0.72/$7.98 B

Starwood Hotels (HOT)- Hospitality Company
Actual EPS/Revenue: $0.35/$1.29 B
Estimate EPS/Revenue: $0.26/$1.25 B
Year Ago EPS/Revenue: $0.22/$1.21 B

UPS (UPS)- Package Deliverer
Actual EPS/Revenue: $0.84/$12.20 B
Estimate EPS/Revenue: $0.77/$11.98 B
Year Ago EPS/Revenue: $0.49/$10.83 B

After the Bell

American Express (AXP)- Credit Card Company
Actual EPS/Revenue: $0.84/$6.86 B
Estimate EPS/Revenue: $0.78/$6.84 B
Year Ago EPS/Revenue: $0.09/$6.09 B

Amazon.com (AMZN)- Online Retailer
Actual EPS/Revenue: $0.45/$6.56 B
Estimate EPS/Revenue: $0.54/$6.54 B
Year Ago EPS/Revenue: $0.32/$4.65 B

Capital One (COF)- Bank
Actual EPS/Revenue: $1.33/$3.90 B
Estimate EPS/Revenue: $0.88/$4.00 B
Year Ago EPS/Revenue: ($0.65)/$4.15 B

Microsoft (MSFT)- Software Giant
Actual EPS/Revenue: $0.51/$16.04 B
Estimate EPS/Revenue: $0.46/$15.27 B
Year Ago EPS/Revenue: $0.36/$13.10 B

Sandisk (SNDK)- Semiconductor Manufacturer
Actual EPS/Revenue: $1.08/$1.18 B
Estimate EPS/Revenue: $0.90/$1.16 B
Year Ago EPS/Revenue: $0.36/$731 M

Huge Market Turn Around, But Why?

2010-07-20T23:52:00.000-04:00

The market plunged at the open today, dropping more than 1.50% in the morning trading session. Then, at 9:45am, the market began to rally in a big way, finishing up more than 1% on the day. So what caused a 2.5% move in the market today- a rumor. Yes, a rumor. We were hoping that it was earnings and/or guidance lifting the market, but its not. The rumor is that the Federal Reserve (the Fed) is planning to stop paying interest on bank reserves. Why does this matter? The banks can no longer make interest on cash that they have. This means that the banks will be more inclined to lend this money, so that they can make a profit. As evidence of this rumor, the banks and home builders were the market leaders today. Both sectors saw significant moves higher.

Although this rumor has been denied repeatedly the past week, trader continue to insist that its a real possibly. This action by the Fed would definitely help to boost the economy, but I see this rumor to be other more than a rumor. Rumors are often invented by "big wig" hedge fund managers who are caught on the wrong side of a trade. Instead of taking a loss, the manager will make up a story (wall street lying, who knew...haha) to get the stock price to move up or down depending on whether they are long or short. I think that this is what this rumor was created for- hopefully its true though.

2010 Q2 Earnings Reports- Wednesday, July 21st

2010-07-20T23:26:00.003-04:00

Before the Bell

Coca-Cola (KO)- Beverage Maker
Actual EPS/Revenue: $1.06/$8.67 B
Estimate EPS/Revenue: $1.03/$8.70 B
Year Ago EPS/Revenue: $0.92/$8.27 B

United Technologies (UTX)- Aerospace
Actual EPS/Revenue: $1.20/$13.28 B
Estimate EPS/Revenue: $1.16/$13.56 B
Year Ago EPS/Revenue: $1.05/$13.20 B

Altria (MO)- Tobacco Company
Actual EPS/Revenue: $0.50/$4.34 B
Estimate EPS/Revenue: $0.50/$4.36 B
Year Ago EPS/Revenue: $0.50/$4.59 B

EMC (EMC)- Computer Hardware Company
Actual EPS/Revenue: $0.28/$4.02 B
Estimate EPS/Revenue: $0.27/$3.98 B
Year Ago EPS/Revenue: $0.18/$3.26 B

Stanley Black & Decker (SWK)- Household Products Maker
Actual EPS/Revenue: $1.24/$2.71 B
Estimate EPS/Revenue: $0.78/$2.25 B
Year Ago EPS/Revenue: $0.55/$919 M

Wells Fargo (WFC)- Bank
Actual EPS/Revenue: $0.55/$21.39 B
Estimate EPS/Revenue: $0.48/$21.40 B
Year Ago EPS/Revenue: $0.57/$22.51 B

After the Bell

eBay (EBAY)- Online Auction House
Actual EPS/Revenue: $0.40/$2.20 B
Estimate EPS/Revenue: $0.38/$2.17 B
Year Ago EPS/Revenue: $0.37/$2.10 B

Netflix (NFLX)- Movie Rental Retailer
Actual EPS/Revenue: $0.80/$519.8 M
Estimate EPS/Revenue: $0.70/$524 M
Year Ago EPS/Revenue: $0.54/$409 M

Qualcomm (QCOM)- Telecommunications Equipment
Actual EPS/Revenue: $0.57/$2.70 B
Estimate EPS/Revenue: $0.54/$2.63 B
Year Ago EPS/Revenue: $0.54/$2.74 B

Starbucks (SBUX)- Coffee Store Chain
Actual EPS/Revenue: $0.29/$2.60 B
Estimate EPS/Revenue: $0.29/$2.56 B
Year Ago EPS/Revenue: $0.24/$2.40 B

2010 Q2 Earnings Reports- Tuesday, July 20th

2010-07-19T22:55:00.002-04:00

Before the Bell

Johnson & Johnson (JNJ)- Healthcare
Actual EPS/Revenue: $1.21/$15.33 B
Estimate EPS/Revenue: $1.21/$15.38 B
Year Ago EPS/Revenue: $1.15/$15.24 B

Goldman Sachs (GS)- Investment Bank
Actual EPS/Revenue: $2.75/$8.84 B
Estimate EPS/Revenue: $2.03/$8.99 B
Year Ago EPS/Revenue: $4.93/$13.76 B

Whirlpool (WHR)- Home Appliance Maker
Actual EPS/Revenue: $2.64/4.53 B
Estimate EPS/Revenue: $2.13/$4.48 B
Year Ago EPS/Revenue: $1.04/$4.17 B

Pepsico (PEP)- Beverage Maker
Actual EPS/Revenue: $1.09/$14.80 B
Estimate EPS/Revenue: $1.08/$14.41 B
Year Ago EPS/Revenue: $1.02/$10.59 B

Harley Davidson (HOG)- Motorcycle Company
Actual EPS/Revenue: $0.59/$1.14 B
Estimate EPS/Revenue: $0.41/$1.13 B
Year Ago EPS/Revenue: $0.08/$1.15 B

After the Bell

Apple (AAPL)- Tech Giant
Actual EPS/Revenue: $3.51/$18.80 B
Estimate EPS/Revenue: $3.11/$14.75 B
Year Ago EPS/Revenue: $1.35/$8.34 B

Yahoo (YHOO)- Internet Search Company
Actual EPS/Revenue: $0.15/$1.13 B
Estimate EPS/Revenue: $0.14/$1.16 B
Year Ago EPS/Revenue: $0.10/$1.14 B

Boston Scientific (BSX)- Medical Equipment Maker
Actual EPS/Revenue: $0.12/$1.928 B
Estimate EPS/Revenue: $0.03/$1.91 B
Year Ago EPS/Revenue: $0.13/$2.07 B

VMWare (VMW)- Software Company
Actual EPS/Revenue: $0.35/$673.90 M
Estimate EPS/Revenue: $0.32/$656 M
Year Ago EPS/Revenue: $0.20/$456 M

Market Opens Higher

2010-07-19T10:16:00.000-04:00

Several areas of good news are lifting the market early this morning. First, good earnings were reported by DAL, HAL, and HAS before the bell (check Saturday's post for numbers). The one problem with the reports is that revenues are a little weak, which is a negative sign, but the companies are reporting profits above estimates though. Second, the NABE (National Association for Business Economics) said its latest survey found that 31% of businesses added workers between April and June, the highest level in three years. Also, 39% of those surveyed, said they expect to hire more worker in the next six to nine months. This is definitely a step in the right direction. Unemployment is holding this market back. The sooner the US starts hiring again, not only will the economy turn again, but the stock market will begin to rally.

2010 Q2 Earnings Reports- Monday, July 19th

2010-07-17T21:19:00.005-04:00

Before the Bell

Delta Airlines (DAL)- Airline
Actual EPS/Revenue: $0.65/$8.17 B
Estimate EPS/Revenue: $0.63/$8.27 B
Year Ago EPS/Revenue: ($0.24)/$7.00 B

Halliburton (HAL)- Oil Services
Actual EPS/Revenue: $0.52/$4.4 B
Estimate EPS/Revenue: $0.37/$4.09 B
Year Ago EPS/Revenue: $0.29/$3.49 B

Hasbro (HAS)- Toy Maker
Actual EPS/Revenue: $0.29/$737.8 M
Estimate EPS/Revenue: $0.24/$748 M
Year Ago EPS/Revenue: $0.26/$792 M

After the Bell

IBM (IBM)- Technology Services
Actual EPS/Revenue: $2.61/$23.7 B
Estimate EPS/Revenue: $2.58/$24.2 B
Year Ago EPS/Revenue: $2.32/$23.25 B

Crown Holdings (CCK)- Containers and Packaging Manufacturer
Actual EPS/Revenue: $0.67/$2.01 B
Estimate EPS/Revenue: $0.67/$2.12 B
Year Ago EPS/Revenue: $0.66/$2.06 B

Texas Instruments (TXN)- Semiconductor Maker
Actual EPS/Revenue: $0.64/$3.5 B
Estimate EPS/Revenue: $0.62/$3.52 B
Year Ago EPS/Revenue: $0.20/$2.46 B

Tupperware (TUP)- Container Maker
Actual EPS/Revenue: $0.93/$565.1 M
Estimate EPS/Revenue: $0.97/$580 M
Year Ago EPS/Revenue: $0.86/$525 M

Zions Bancorp (ZION)- Bank
Actual EPS/Revenue: ($0.84)/$522.76 M
Estimate EPS/Revenue: ($0.54)/$557 M
Year Ago EPS/Revenue: ($0.35)/$1.08 B

Key Earnings Reports This Week

2010-07-17T20:59:00.000-04:00

Q2 earnings season continues this week. Below are a list of companies to watch closely this week. Their earnings, but more importantly, their guidance will be a key to how the stock market performs this week.

Monday- IBM, HAS
Tuesday- PEP, AAPL
Wednesday- UTX, EBAY, WFC
Thursday- CAT, MMM
Friday- SLB, MCD

Good Earnings, Bad Economy

2010-07-16T22:24:00.001-04:00

Today's huge sell off of the stock market shows that investors are more concerned with the poor US economic data than the good news that have been announced in the Q2 earnings reports. More than likely, companies' guidance will continue to be better than expected, but it seems that this is not enough of a catalyst for the market.

Today's Numbers
DJIA: 10,097.90 -261.41(-2.52%)
NASDAQ: 2,179.05 -70.03(-3.11%)
S&P 500: 1,064.88 -31.60(-2.88%)

The dollar also fell sharply this week, losing 2.2% on the week against both the yen and euro. The disappointing U.S. economic reports shifted the focus from Europe's problems to whether the US economy will see a double dip recession.

This Week
DJIA: -100.13(-0.98%)
NASDAQ: -17.40(-0.79%)
S&P 500: -13.08(-1.21%)

Risky Trade- VVUS

2010-07-16T13:41:00.001-04:00

This morning, it was announced that Vivus' (VVIS) new weight loss drug, Qnexa, was rejected by a count of 9-7 by an FDA panel. The stock has been absolutely slammed by investors. Currently trading at 5.20/share, the stock has lost 57% of its value today. Although this would have been their blockbuster drug, it certainly isn't the companies only drug in its pipeline. First, the drug nearly passed; meaning that changes can be made to the drug and go through the clinical testing process again. Second, they have an ED drug in Phase III testing. They also have several investigational product candidates in late stages of clinical development.

I'm not saying that this is a long term investment; rather, I feel that these facts could be a catalyst for the stock to move higher over the next week. The stock has already started to trend higher since noon. Once again, I reiterate that this is risky, but a 10% move up in the stock over the next week is possible.

VVUS 5.20 -6.91(-57.06%)

Big Drop at the Open

2010-07-16T10:17:00.003-04:00

Good news all around this morning, but the market is ignoring this and selling off rather hard. Citigroup (C) and Bank of America (BAC) both reported good numbers. Currently, C and BAC are both trading down, -4.08% and -6.69% respectively. I think this is a good time to start building a position in BAC, and as I said in my first post, buy C under $4/share. Another important event was that BP was able to temporarily stop the leak. Whether or not the new cap will hold is yet to be seen, but the key now is to get the relief wells finished to permanently stop the leak. Also, Goldman Sachs agreed to pay $550 million in conjunction with misleading investors in CDOs linked to the subprime mortgages. This fine is not too much, about a couple weeks of profit for the firm. The stock has already spiked after the news, but I expect the stock to trend higher as the shorts exit and value investor buy in.

Headed into this weekend, I would buy on this weakness. They do not need to be high beta plays, risky investments; rather, buy into those dividend paying names (see June 29th post)- MO, VZ, WM, etc.

Fed Forecast Doesn't Look Good

2010-07-15T09:23:00.000-04:00

To understand the way the Federal Reserve views the economic recovery, think about a long, bumpy train ride. The train is moving toward its destination—but it could well be “five to six years,” as the Fed put it in the minutes released Wednesday of its June meeting—before it moves as fast it can. Here’s what the central bank said in Fedspeak, “Participants generally anticipated that, in light of the severity of the economic downturn, it would take some time for the economy to converge fully to its longer-run path as characterized by sustainable rates of output growth, unemployment, and inflation ... most expected the convergence process to take no more than five to six years."

That time frame had been out there, but previous Fed minutes said that only a minority of participants of the rate-setting Federal Open Market Committee (FOMC) believed that to be the case. Now it appears to be conventional wisdom. This explanation has been a long time in coming. In normal times, you would expect the Fed to either be hitting its targets for inflation, growth and unemployment now, or to do so within a three-year window. The Fed drives the train. So if it’s not where it wants to be, it can speed up or slow as needed. If a majority of Fed officials, for example, don’t believe that the unemployment rate will be in the 5 percent range by 2012, the Fed should lower rates. But not since July 2008 has the average forecast for the 17 members of the FOMC projected an unemployment rate three years out that was around 5 percent, the presumed potential of the economy. That was also the last time the Fed thought it would hit its inflation target of around 2 percent in a three-year window. So not only the Fed has been unable to get the train up to speed, it’s been acknowledging it wouldn’t get there.

Take Advantage of Dip in Apple

2010-07-14T11:23:00.001-04:00

I'm sure you have all heard about the "death grip" that Apple's (AAPL) new iPhone users are complaining about. The stock has seen quite a decline from its 52 week high- about a 9% decline. Although this is not good PR for Apple, the problem is an easy fix. All the iPhone users need to do is buy a case for the phone. In my opinion, the worse case situation is AAPL taking a one time charge to give all iPhone users cases. I don't think the Consumer Digest "don't buy" comments will stop anyone from buying the new iPhone- its a must have gadget. Take advantage of the price decline, I doubt AAPL stays this low for too much longer. AAPL is currently trading at $250.37/share at 10:06am.

CMG and DPS- Two Great Buys

2010-07-13T23:26:00.001-04:00

Two of my favorite buys right now are Chipotle Mexican Grill (CMG) and Dr Pepper Snapple (DPS). Both of these companies are great growth stocks, and can continue consistent growth even if the economic recover is slower than expected.

First, lets talk about Chipotle. What's working for this company. First, it has wonderful brand recognition and is known for its great food at a reasonable price. Second, there are still many untapped markets for it to expand. Third, the ingredients are fresh and organic- a key difference from other fast food restaurants. Fourth, their Q1 numbers were great, and they raised FY guidance. I expect great numbers from them this quarter, and in the years to come.

Now, lets talk Dr Pepper Snapple. This company has flown under the radar the past year. They are currently sitting at a 52 week high- how many companies can say that. This isn't because they are a defensive play, its due to the tremendous growth of revenues/profits. The company is cutting costs and becoming very "lean". DPS is passing along its successes to its shareholders, increasing their dividend by 67% to $0.25/quarter. DPS would only raise their dividend this much if they knew that the company would continue to have great growth in revenues/profits in the years to come.

CMG 142.76 52wk 78.47-155.42
DPS 39.16 52wk 21.52-39.31

CSX- Good Earnings and Guidance

2010-07-13T10:07:00.000-04:00

CSX, one of the nation's largest railroads, doesn't think the economy is headed into a double dip recession and seems fairly optimistic about the rest of the year. To me, this is probably one of the most important earnings report of Q2 because its a pure sign of the Chinese economy. With good Q2 numbers and optimism, this shows that there is no China slowdown- right now, a strong China means a more stable US economy. I was wrong in thinking that the guidance from CSX would be cautious, but this guidance makes this rally seem more believable.

Although, I now think the earnings from companies will be better than I expected, I still think you sit on the sidelines when it comes to buying individual companies ahead of their earnings reports. I think technology as a whole will do better than expected, so a good play would be to buy QQQQ. Its hard to pick the individual companies that will have a good report, but if you take a broader position, it will help to limit potential losses.

CSX 53.51 +1.05 (+2.00%) @10:00am

New BP Developments

2010-07-12T14:13:00.001-04:00

Numerous events have occurred this weekend and early this morning involving BP.

1) BP are saying that a new cap could stop the flow of oil as soon as the end of this week- BP will know if the cap will work within the next 48 hours.
2) BP is looking to sell off assets to raise cash
3) Exxon Mobil approached the White House this weekend and asked if there would be a problem if they made a bid to buy BP.

These three events are helping to lift the stock up 7.20% to 36.50/share at 2:00 pm. Obviously, the most important of these events is the first. If this new cap does not work, the stock price will easily lose all of today's gains. As for the second event, this is a sign that BP is realizing that they may have a liquidity problem. They realize that they do not have enough cash to cover the clean up, lawsuits, and fines that they will be hit with over the next ten years. As for Exxon buying BP, I do not know if this will happen; but, it would make sense. Exxon will know how to handle the situation having dealt with the Valdez oil spill.

For the sake of the Gulf Coast region, let's hope that new cap works.

Stocks to Watch This Week

2010-07-11T21:59:00.000-04:00

Q2 earnings season begins this week. Below are a list of companies to watch closely this week. Their earnings, but more importantly, their guidance will be a key to how the stock market performs this week, and possibly the remainder of the year.

Monday- AA, CSX
Tuesday- INTC, YUM
Wednesday- TXN
Thursday- JPM, GOOG
Friday- BAC, C, GE

FUN- Maybe Not

2010-07-10T01:07:00.000-04:00

Cedar Fair (FUN) is an amusement park operator, which owns 11 amusement parks, 6 outdoor water parks, an indoor water park and 5 hotels- consisting of big name parks like: Cedar Point, King's Island, Valleyfair, and Knott's Berry Farm. In early May, FUN released FY 2010 guidance. Revenue guidance was above analysts' estimates and all operating costs were in line with estimates. However, I feel the company may have been a little to optimistic when it released its FY 2010. The economy has not improved since the release, some may say it has declined, and the weather has been unusually hot. These two factors would definitely decrease attendance to their parks. I have heard and read from many, that Cedar Point, the company's 'crowned jewel', has been much less crowded this season. July 4th, traditionally Cedar Point's most crowded day of the season did not have the typical attendance. FUN does not report its Q2 results until August 3rd, so there is plenty of time to read up on the situation and do some more homework; but, from what I have read and heard, I would not want to be long this stock come earnings day.

Cedar Fair (FUN) 12.75 52 wk 6.03-15.79

Another Solid Up Day on Low Volume

2010-07-08T21:13:00.000-04:00

A late day rally pushed the major market averages higher today. As I stated yesterday, its a positive sign to see these late day rallies, but I remain skeptical about this market. There was low volume again today, and the retail sales numbers were a mixed bag- its hard to tell whether the consumer is back or not. The key is next week. Everyone will be back from vacation and trading volumes will be back to normal. With 2nd quarter earning next week, this could make for a volatile few weeks. The rally today was hard to believe in because it was not lead by the financials or technology- these sectors lagged the overall market. In order for the market to continue to move higher, we need to see leadership from the financials and technology. Key lagers today were AAPL, MSFT, INTC, JPM, WFC, GS.

Be Skeptical of This Rally

2010-07-07T22:44:00.002-04:00

Although we have all enjoyed the 3.69% move higher in the S&P 500 the past two days, we need to stay skeptical of the move. Reasons to be cautious:

1. Its the week after a holiday- typically the market trends higher on holiday weeks.
2. Rally is on normal to below normal volume. When there are moves of this magnitude, you want to see them on large volume- this shows that people are coming off the sidelines to get back into the market.
3. Next week begins 2nd quarter earnings reports. Traders will usually cover their shorts and not want to short the market ahead of earnings.
4. What has changed since last Friday? Nothing- housing data and unemployment has not changed or shown any signs of turning around.

As stated, next week begins 2nd quarter earnings, and the outlooks of the companies are whats going to drive this market up or down. My estimates are that any companies directly relying on the consumer, especially the service sector (ie M, TGT, WMT, etc), are going to be very cautious for the second half of the year.

Very Tough Week for the Markets

2010-07-03T09:35:00.000-04:00

This week was a horrible week to be long stocks. The major average had huge declines, commodity prices dropped, and treasury yields fell considerably. Yet, I still think there is still some more downside to come:

1) The 10 year treasury is still below 3%- a lot of investors, including myself, see the 10 year as a "fear factor" when it comes to the stock market.

2) Late day market sell offs- if the market wants investor confidence to rise, we need to see buying into the close, not selling.

3) Gold price rising- gold is a "safe haven" when times get tough in the market. Its generally thought that gold will never go to zero, so its a safe plae to put your money.

4) Bad economic data- for awhile, the economic data had improved dramatically, but I believe that the European scare slowed people's spending and companies' hiring. If the Euro can continue to rise against the US dollar, then this could be a sign that Europe's economy is improving.

5) No catalyst to buy- looking at the four reasons above, why would anyone want to stick their neck out and buy into this market.

So, there is no reason to rush into this market. With the 10 year yield under 3%, I feel that investors will continue to look toward good dividend paying stocks (look at Tuesday's post)- these companies have outperformed the market this past week. Key indicators to watch for a potential turnaround in the market: the 10 year, late day buying, continued rising Eruo vs US dollar.

This weeks numbers:
DJIA: -457.33 or -4.51%
S&P 500: -54.18 or -5.03%
NASDAQ: -131.69 or -5.92%

S&P 500 Breaks Support Level

2010-06-30T16:15:00.000-04:00

In the last hour of the trading day, the S&P 500 broke through the 1040 level. The market has bounced off this level repeatedly over the past month, selling off sharply after the market failed to bounce off. This is a very bearish sign for the market, and the market will more than likely continue to sell off as the technicians will definitely bid this market lower. Another bearish sign is the 10 year treasury, now yielding just 2.94%. To me, the 10 year is a key indicator of where the market is going. If the 10 year continues to fall, so will the market. Investors are worried about the world economies; this is why they are flocking to treasuries. This trend will continue until a)European financial markets are fixed and b)US housing and employment numbers begin to rise.

Down Market=Opportunities

2010-06-29T21:40:00.004-04:00

With uncertainty still looming over this market, there is good reason to be cautious; but this is also a great opportunity to start building or continue adding to your positions in defensive and/or high dividend yielding stocks. I am going to name my favorite defensive/dividend plays, all of which have increased their dividend within the past year.

1. Altria (MO) $19.96/share, Div Yield: 7.01%
2. Dr Pepper Snapple (DPS) $37.79/share, Div Yield: 6.20%
3. Home Depot (HD) $28.63/share, Div Yield: 3.30%
4. Eli Lilly (LLY) $33.75/share, Div Yield: 5.81%
5. Magellan Midstream Part. (MMP) $46.19/share, Div Yield: 6.24%
6. Waste Management (WM) $31.46/share, Div Yield: 4.01%
7. Procter & Gamble (PG) $60.32/share, Div Yield: 3.19%
8. Johnson & Johnson (JNJ) $59.24/share, Div Yield: 3.65%
9. Verizon (VZ) $28.62/share, Div Yield: 6.64%

Sell Research in Motion (RIMM)

2010-06-28T17:01:00.001-04:00

We have all heard about this trade, over and over, but it still holds true. Selling Research in Motion (RIMM), even after the huge decline it had after it reported earnings last week, is still a good play. Not only is RIMM losing customers to the iPhone hand over fist, come this July, the release of the new Droid X will surely hurt sales for RIMM. Also, with rumors circulating that Verizon (VZ) could be getting the iPhone by as early as this fall, RIMM could be in an even worse situation. Until RIMM announces a smart phone that can rival the iPhone or Droid X, there is no catalyst for this stock to go higher. The introduction of the Blackberry (RIMM's smart phone) was evolutionary to the cell phone community; but, RIMM has lacked new technology and innovation, allowing the iPhone and Droid to step in and steal Blackberry users.

-Alex

Buy Citigroup (C)

2010-06-27T01:34:00.001-04:00

This year, had two issues that needed to be addressed before its stock price could make a significant move to the upside- financial reform and the Treasury selling its stake in the bank. This week, the financial reform bill was passed by Congress, and for the past month, the Treasury has been selling millions of shares a day. Once the Treasury completes selling their stake, there will be nothing to hold this stock back. Now I'm not saying that I think it will ever get back to pre-'08 levels, but over the next 3-5 years, I don't think its unrealistic to think that this stock will be at $12/share- a 204% increase from its $3.94/share close on Friday. The CEO, Vikram Pandit, has done an excellent job turning this company around and bringing it back to profitability- and I expect this to continue in the future. Anytime the price is below $4/share, its a great time to add to your position, as long as you plan on holding on to this name long term.

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