Morning Coffee with TradingMarkets

  • January 31, 2008
  • David Penn

Good Morning!

Fed Cuts Rate 50 Basis Points… Markets Reverse 200 Point Intraday Rally… Bristol-Meyers Loss Narrows… Will Fed Cuts Lead to Higher Mortgage Rates?… Procter & Gamble Beats… European Confidence Wanes… Adobe Downgraded… Wyeth Profits Climb 17%… MBIA Posts Massive Quarterly Loss… Amazon’s Earnings Grow But Forecast Disappoints… Alliance Data Rallies in Pre-Market.

Asian stocks up… European stocks down… Greenbacks moving higher/lower against the Euro, yen…And the futures are trending lower in the hour before the bell.

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TradingMarkets 5 Business Stories You Need to Know

Market Slides After Fed 50 Point Cut – New York Times

Bernanke Fed cuts the Fed funds rate for the second time in little over a week as concern over softness in the economy grows. The Fed funds rate currently stands at 3.0%, a level not seen since early 2005. Stocks rallied sharply higher immediately after the Fed announcement, but fell back shortly afterward, leaving the Dow, S&P 500 and Nasdaq down for the day.

Bristol Meyers Limits Losses – CNN Money

Bristol Meyes Squibb narrowed its losses, but still missed analyst estimates for the fourth quarter. The company also cut the range of its forecast. Difficult news notwithstanding, Bristol Meyers is among the higher PowerRating stocks that investors can choose from. Bristol Meyers also comes from an industry where investors can discover a number of stocks that are more likely than the average stock to be higher in a year’s time.

Procter & Gamble Beats Estimates, Spins Off Folgers – CNN Money

Slower growth in U.S. and Western Europe offset by growth in sales in developing world. Raw materials costs mean higher prices for the company’s products going forward. Procter & Gamble to spin off Folgers as independent coffee company. Procter & Gamble is a high PowerRating stock, making it the sort of stock that investors should consider if they are looking for stocks that are more likely than the average stock to be higher one year from now.

Arms Sales, Lower Taxes Boost Raytheon – Reuters

Sale of military equipment and lower taxes helped Raytheon increase its net income for the fourth quarter. The company is the fifth largest defense contractor in the United States. Raytheon has a PowerRating that is just slightly above average, making it a good–but not great–investment at this time. But there is one other company in its industry that has an even better chance at being higher in a year’s time than the average stock. Find out that name at PowerRatings.net.

MBIA Posts Biggest Quarterly Loss – Associated Press

Troubled bond insurer posts $3.5 billion in write downs and a quarterly loss of $2.3 billion. Losses raise risk that MBIA will lose its triple A credit rating. The company says that it is looking into new ways to raise capital. But the shares were down sharply in pre-market trading. When it comes to “bad houses in bad neighborhoods,” MBIA is a classic example. A low PowerRating in an industry with a low PowerRating makes this company’s stock one for investors to continue avoiding.

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:

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

TradingMarkets 5 Top PowerRatings Stocks for Today

Company
 Symbol PowerRatings
United Therapeutics UTHR 9
THQ THQI 8
Omnicell OMCL 8
Intuitive Surgical ISRG 8
Chipotle Mexican Grill CMG 8

View More Stocks

TradingMarkets Tracking the Wizards

Julian Robertson’s Own Account Up 403% Since “Retirement” – Fortune

Former hedge fund titan of the legendary Tiger Fund shows that he still has the right stuff even in retirement. Robertson stopped managing other people’s money eight years ago, but in 2007 managed to beat the best returns of his money managing days by trading his own account up 76.7%

Slow Motion Blow Up at Sailfish Capital? – FINalternatives

Liquidating positions and sending out resumes, hedge fund traders at Sailfish Capital Partners brace for what are expected to be sizable redemptions from the underperforming fund. The company official refutes the idea that the fund is collapsing. But assets under management have dwindled in the wake of the fund’s weak performance in 2007, including a 4.8% loss in December alone.

Galloway Takes on the New York Times – Portfolio.com

Activist investor Scott Galloway has teamed up with Harbinger Capital in an effort to shape major changes at the New York Times, including a new focus on the company’s core assets and an increase in the New York Times digital presence. But will the board and NYT chairman Arthur Sulzberger Jr. go along?

View Portfolios of Prominent Investors

TradingMarkets Playbook

The volatility we expected surrounding the Fed’s rate decision arrived in spades, sending the market soaring and then crashing on an intraday basis on Wednesday. We continue to suggest that stocks not be given the benefit of the doubt and that only quality opportunities be pursued at this time. In other words, our playbook is still best summed up by Larry Connor’s “Five Mistakes To Avoid in a Market Trading Below its 200-day Moving Average” primer–available at TradingMarkets.com.

The futures are pointing to a weak open, which is to be expected after yesterday’s intraday reversal. What remains to be seen is whether the from last week will hold. While a test of those lows should not be unexpected, it will be important to see how the market reacts as the selling begins. Another reversal, which sees early selling met with significant buying, would be a major bullish development for the markets in the wake of the Fed’s decision to lower its rate to 3.0%.

David Penn is Senior Editor at TradingMarkets.com.

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