Morning Coffee with TradingMarkets

  • December 20, 2007
  • David Penn

Good Morning!

Fed’s $20 Billion Bond Auction a Big Hit …Morgan Stanley Gets Chinese Investment…Oracle Beats on Sales and Profits…Bear Disappoints…Citi Cleans CDO House…Pound Falls Below $2…Japan Keeps Rates Steady…Congress Battles AMT…Asian Stocks Down…Europe Up…Dollar trending upward against the Euro, pound…Futures slightly higher in the hour before the bell.

Money continues to pour into the markets, with both the Federal Reserve and the Chinese government riding to the rescue of a credit squeezed banking system. Could another virtuous circle begin: with the Chinese recycling their massive dollar reserves back into the battered coffers of American banks? Earnings from FedEx and Bear Stearns will preoccupy some investors. But the real performance to watch may be in the small caps (see the TradingMarkets Playbook below).

» 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

Fed Auction: Not with a Bang But a Whisper –New York Times

Fed’s secret auction lets banks borrow without discount window “stigma.” More than 90 institutions gobbled up loans offered at rates only a few basis points below prevailing levels.

Morgan Stanley’s Historic Miss – Wall Street Journal

News of Chinese investment from sovereign wealth fund helps blunt impact of “worse than expected” fourth quarter.

Money Managers Optimistic About ’08 –Wall Street Journal

More than a third of surveyed managers believe U.S. stocks are undervalued. 74% believe that the markets will move higher in 2008. Companies with steady growth seen to be best investments.

Oracle Outperforms in Quarter – Bloomberg

Larry Ellison’s company exceeds estimates for both profits and sales. Shares rallied after the announcement seemed to reflect confidence that the company would be able to weather any economic slowdown.

Foreclosures Up More than 68% – USA Today

Americans filing for foreclosure spiked compared to last year, with nearly 202,000 filings in November or one in every 617 households. Foreclosure filings were down from the previous month.

» 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:

  • Nike
    (
    NKE |
    Quote |
    Chart |
    News |
    PowerRating)     beat earnings on Wednesday afternoon, reporting $0.71 EPS over an expected $0.66 EPS.

  • Paychex
    (
    PAYX |
    Quote |
    Chart |
    News |
    PowerRating)     also beat earnings on Wednesday, with $0.40 EPS over $0.39 EPS.

  • Mortgage related write-downs helped drive Bear Stearns
    (
    BSC |
    Quote |
    Chart |
    News |
    PowerRating)     to report a fourth quarter loss of $6.90 per share Thursday before the open.

  • When Carnival
    (
    CCL |
    Quote |
    Chart |
    News |
    PowerRating)     announces quarterly results on Thursday before the bell, look for $0.43 EPS.

  • FedEx
    (
    FDX |
    Quote |
    Chart |
    News |
    PowerRating)     reported lower revenues and earnings compared to a year ago, though quarterly EPS beat analyst’s estimates.

  • Revenues surged 51%, even as net income softened in the third quarter for Rite Aid
    (
    RAD |
    Quote |
    Chart |
    News |
    PowerRating)     which reported this morning before the bell.

  • Pier 1 Imports
    (
    PIR |
    Quote |
    Chart |
    News |
    PowerRating)     expects to announce -$0.24 EPS tomorrow morning

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

TradingMarkets 5 Top PowerRatings Stocks for Today

Company
 Symbol PowerRatings
Astronics ATRO 9
TransDigm Group TDG 8
Travelcenters of America TA 8
Input/Output IO 8
First Marblehead FMD 8

» View More Stocks

TradingMarkets Tracking the Wizards

Barton Biggs Up 24% Year-to-Date – Reuters

After a rough November, Biggs’$1.6 billion hedge fund, The Traxis Fund is still delivering for investors in 2007. Fund is “macro” fund that trades stocks, international currencies and bonds.

Dallas’ Bass Wins Big in Bet Against Subprime Debt – Bloomberg

Former Bear Stearns salesman turned hedge fund trader cites excellent risk/reward in shorting debt at par. Says Bass, “You had to have imagination to believe us.”

Mark Cuban on Buffett, Taxes – Blog Maverick: The Mark Cuban Weblog

Owner of Dallas Mavericks, man behind HDNet talks about the legendary investor and tax policy Cuban-style.

» View Portfolios of Prominent Investors

TradingMarkets Playbook

It is interesting to see that the big caps stocks were flat yesterday while the IWM’s (the exchange traded fund for the Russell 2000) moved up more than 1/2 percent. These stocks have been hard and it appears the money is going to flow faster into these small cap companies on any rallies. Short covering will provide some fuel, also.

Even though there is not much of a bias today, the focus should remain on the IWM’s. As they go, the rest of the market will go.

David Penn is Senior Editor at TradingMarkets.com.

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