Morning Coffee with TradingMarkets

  • January 14, 2008
  • David Penn

Good Morning!

Earnings Season Continues With Financials Under Spotlight…IBM Pre-Announces Earnings Beat…Investors Pile into Gold ETFs…Writer’s Strike Boon for American Idol…Sears Warns of Weak Q4…Home Depot, Bath Bath & Beyond, Apple Upgraded…Fed Signals More Aggressive Rate Cutting Ahead…Asian stocks mixed…European stocks up from the lows…Dollar moving lower against the Euro, yen…And the futures are trending strongly higher in the hour before the bell.

Have the markets already discounted the likely awful earnings and write downs of the financial we are likely to hear this week? Or will the news that finance is riddled with debt of opaque value manage to surprise investors who have heard the same wailing for weeks? IBM’s pre-announcement looks to have helped set up a stronglly positive open this morning. But it remains to be seen whether Friday’s selling or the mid-week buying accurately represents the mood of the market.

» Take the TradingMarkets Path to Professional Trading – Level 1 course and immediately improve your trading. It’s free! Start here.

TradingMarkets 5 Business Stories You Need to Know

This Week’s Earnings: Citi, JP Morgan, Intel, GE – Marketwatch

Some of the earnings announcements investors and traders will look for this week include some of the biggeset financial names like Citigroup and JP Morgan, as well as top chipmaker Intel and industrial conglomerate IBM. All four stocks come from industries with top PowerRatings, but which of these four stocks themselves is most likely to be higher one year from now?

Big Blue Beats Estimates – BusinessWire

Boasting of strong overseas sales, International Business Machines this morning announced a gain of 24% for fourth quarter earnings per share and a 10% increase in fourth quarter revenues. IBM is one of the stronger, higher PowerRating stocks in the Dow Industrials and comes from a high rated industry as well. Visit PowerRatings.net to find more of these sort of high PowerRatings stocks in high PowerRatings industries.

Goldman: Growth Slower in Asia – Bloomberg

Analysts at Goldman Sachs worry that a slow down in the United States would have an adverse effect on Asian exporters. Goldman has previously suggested that growth in Asia had “decoupled” from the United States; now anticipates recession in the United States and slower growth in Japan could represent “tipping point” for Asian economies.

Investors Rush to Gold ETFs – Marketwatch

With futures in the gold market testing $900 an ounce, exchange-traded funds that track the yellow metal are in high demand among investors. Our PowerRatings have at least one gold-related ETF at the top of our ETF stocks listing. But gold ETFs aren’t the only high PowerRating exchange traded funds that are likely to be higher.one year from now.

A New and Improved Yahoo? – New York Times

Can one of the survivors of the dot.com era compete in the age of Facebook and Google? Yahoo is an average PowerRating stock in a tricky industry for investors. But its companions in this industry group represent better–and worse–bets for investors looking for exposure to growth in the Internet Information Provider business.

» For more stories as they happen, go to our Breaking News section.

TradingMarkets 7 Stocks You Need to Know for Today

Here are 7 stocks for traders for today from TradingMarkets.com:

  • Tiffany’s
    (
    TIF |
    Quote |
    Chart |
    News |
    PowerRating)     sank 9.8% after reporting a decline in same-store U.S. holiday sales.

  • McDonald’s
    (
    MCD |
    Quote |
    Chart |
    News |
    PowerRating)     fell over 6% Friday, on an overwhelmingly negative Dow Composite atmosphere.

  • AllianceBernstein
    (
    AB |
    Quote |
    Chart |
    News |
    PowerRating)     fell 7.7% on Friday after cutting its 2007 EPS forecast by 30 cents.

  • American Express
    (
    AXP |
    Quote |
    Chart |
    News |
    PowerRating)     slumped 10.1% on Friday, after the company announced it would take a $440 million charge in Q4.

  • This morning, IBM
    (
    IBM |
    Quote |
    Chart |
    News |
    PowerRating)     announced preliminary fourth quarter results of 24% increase in EPS and a 10% increase in revenues.

  • Traders pounded shares of Sears (SHLD|SHLD] in the pre-market Monday after the company warned that December sales were softer than expected. Goldman Sachs downgraded the stock from “neutral” to “sell.”

  • Genentech
    (
    DNA |
    Quote |
    Chart |
    News |
    PowerRating)     is expected to report $0.67 EPS after the market closes on Monday.

» For a list of today’s highest PowerRating stocks, click here.

TradingMarkets 5 Top PowerRatings Stocks for Today

Company
 Symbol PowerRatings
Electronic Clearing House ECHO 10
RofinSinar Technologies RSTI 9
Cypress Semiconductor CY 8
Talbots TLB 8
Priceline.com PCLN 8

» View More Stocks

TradingMarkets Tracking the Wizards

Tiger Cub Hedge Fund Up 71% in 2007 – Bloomberg

Funds run by Julian Robertson proteges outperformed in 2007, with Global Management up 71% and Blue Ridge Capital up 65%. The average hedge fund was up approximately 10.7% in 2007 according to Hedge Fund Research, Inc. “Two-sided alpha” or gains for being both long and short, credited for “tiger cub” outperformance.

Credit Fund Shifts From Short Only to Long/Short – FINalternatives

Point Clear Capital Management to maintain short bias, but will begin to look at opportunities for long credit exposure, says firm partner Lyle Minton. Alpha Funds were up 22.17%, 16.84% and 39.05% in 2007 and uses credit default swaps to assume short positions in investment-grade corporate bond market.

Magnetar up 25% in 2007 on Hedged CDO Bets – Wall Street Journal

With colorfully–and astrologically–themed investments labeled Orion and Sagittarius, hedge fund manager Alec Litowitz created some of the worst-performing CDOs of 2007, while managing to hedge his bets well enough to turn in a excellent profit for investors in his fund. A former trader at Citidel, Litowitz rode the highest yielding, most troubled debt instruments and hedged by betting against the less risky CDO paper on the market.

» View Portfolios of Prominent Investors

TradingMarkets Playbook

For all the drama of Friday’s sell-off, as long as the lows hold, the markets will be able to move higher. Sentiment shifted last week to a bearish consensus and everyone from the Fed to the Democratic presidential candidates were offering plans to save the economy. With the Dow, S&P 500, and Nasdaq all below their 200-day moving averages, traders need to focus on quality more than apparent cheapness when it comes to picking stocks that will best benefit from any near-term strength. Stocks like Amazon and Google (which we own as part of our PowerRatings Live Blue Chip Porfolio, up more than 10% since inceptioin on August 1) are examples of quality stocks that have been severely oversold in recent days.

David Penn is Senior Editor at TradingMarkets.com.

Click here to sign up for the Morning Coffee with TradingMarkets newsletter.