Morning Coffee with TradingMarkets

  • December 13, 2007
  • David Penn

Good Morning!

Central Banks to the Rescue…Pepsi Bottling Boosts Forecast…Icahn Calls for ‘Carving Up’ Motorola…Costco Profits Jump in First Quarter…Mezzanine Funds and The Return of the LBO…Lehman Beats…Asia Down…Europe Down…The Dollar Steady Against Euro, Yen…Futures are trending downward an hour before the bell.

Activist government at its finest as central banks in the United States and Europe work to coordinate looser credit policies beyond adjustments to short-term rates. So far the markets are unimpressed, though it remains to be seen how much more mileage the sellers can get out of their disappointment over Tuesday’s 25 basis point cut. Lehman’s earnings announcement surprises by not being as bleak as expected. But that might not be enough to stem what looks to be a soft opening on Thursday.

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TradingMarkets 5 Business Stories You Need to Know

Fed, ECB and Friends Fight To Ease Credit – Bloomberg

Short-term loans and lower interest rates for banks who take advantage of them are among the tricks central banks are deploying to soothe the credit markets.

Lehman CEO Earns Multi-Million Dollar Stock Grant – Wall Street Journal

In spite of the pressures brought on by the credit contraction, some Wall Street CEOs are raking in the bonus bucks. Lehman’s Fuld to receive total bonus compensation in excess of $40 million.

Costco Beats Expectations – CBS Marketwatch

First quarter net income better than analyst expectations, as earnings top estimates by eight cents a share. Costco-like “wholesale clubs” have done well as consumers look to spend less on more.

Motorola Breakup? – Wall Street Journal

Disappointing sales for the company’s Razr cellphone may lead to “carving up” of Motorola. Activist investor Carl Icahn among those leading the charge for change.

More Bad News for BofA –New York Times

Bank of America warns that it will have to set aside $3.3 billion due to shrinking value of assets. Results for Q4 reportedly “quite disappointing,” says CEO Ken Lewis.

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
Learning Tree LTRE 9
Amazon.com AMZN 8
Wynn Resorts WYNN 8
NaviSite NAVI 8
Time Warner Telecom TWTC 8

View More Stocks

TradingMarkets Tracking the Wizards

Hedge Funds Beat Stocks – FINalternatives

Despite being down in November, the Greenwich Global Hedge Fund Index is up more than 10% for the year, beating equity returns for November, as well as year-to-date.

Michael Lewis’ Portrait of a Broker – Porfolio.com

From degenerate stock jockey to efficient-markets strategy, DFA’s Blaine Lourd prefers joining the market rather than trying to beat it.

Metals Hedge Fund Down 22% in November –Bloomberg

Red Kite metal hedge fund struggles to follow up on previous year’s big gains as softness in copper prices leads to losses for the month and year.

View Portfolios of Prominent Investors

TradingMarkets Playbook

Early strength in the markets yesterday faded as those who needed to cover short positions following the Fed-induced sell-off did so. The question now is whether the market’s rejection of Bernanke’s modest 25 basis point cut will provide an opportunity for sellers to regain momentum.

The number of high PowerRatings stocks has increased, reflecting the opportunities the current pullback may be presenting. While traders should be on the alert for an overreaction in either direction, special attention should be paid to the way that the market reacts to any early weakness insofar as it will be up to the sellers to prove that yesterday’s intraday reversal was no fluke.

David Penn is Senior Editor at TradingMarkets.com.

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