Morning Coffee with TradingMarkets
 |
Good Morning! |
Buffett to Launch Bond Insurer…Amazon, Apple Boost Music, Video Download Services…Banks Look to Raise Capital Through Asset Sales…Consumer Prices Continue to Rise, As Does Consumer Confidence…China Allows Faster Yuan Appreciation…Credit Crunch = Y2K?…Nikkei 225 Suffers First Losing Year Since 2002…S&P Companies Pay Record Dividends in 2007…Big Banks Heavily Discount LBO Debt…Dollar trending lower against the yen, Swiss franc…Futures moving higher in the hour before the bell.
The assasination of Benazir Bhutto, the former Prime Minster of Pakistan provided the market with every reason it needed to correct yesterday. And correct it did with markets around the world moving sharply lower in the wake of the shooting and suicide bombing attack that left 16 dead and 60 wounded. The history of the market’s response to such geopolitical shocks, however, has not always been as bearish as yesterday’s selling suggested.
» 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 |
China Sets Rules for Foreign Investment – Wall Street Journal
33% cap for local underwriting joint ventures proposed, though level could rise to 49% over time. Morgan Stanley and Credit Suisse already on board with preliminary agreements subject to new investment rules.
Berkshire Hathaway to Back Bonds – Marketwatch
Legendary investor Warren Buffett’s Berkshire Hathaway Assurance Corporation will insure bonds for munipalities trying to finance public works projects such as sewer systems, as well as schools and hospitals.
Google Millionaires Help Fund Start-Ups – New York Times
Three short years after Google went public, many of the beneficiaries of Google’s success look to parlay their fortunes into helping other technology companies get up and running.
How to Make Your Own Mortgage CDO – Wall Street Journal
Ever wonder how a simple set of mortage loans got to be compiled into a complex collateralized debt obligation (CDO)? Here’s a step-by-step explanation.
From “Stagflation” to “Grocession” – Portfolio.com
How many ways can we dance around the idea that economic growth is likely to remain positive in 2008–regardless of what the economic pundits say?
» 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:
-
Netflix
(
NFLX |
Quote |
Chart |
News |
PowerRating) fell over 4% after Apple and News Corp announced a download and rental plans for films. -
Blockbuster
(
BBI |
Quote |
Chart |
News |
PowerRating) also dropped 6% on the Apple/News Corp announcement. -
Citigroup
(
C |
Quote |
Chart |
News |
PowerRating) fell 3% on Thursday after announcing the bank may cut its dividend by 40% to preserve capital. -
Freddie Mac
(
FRE |
Quote |
Chart |
News |
PowerRating) rallied just under 5% on Thursday, after announcing the company has exceeded its capital requirements for Q3. -
Potash
(
POT |
Quote |
Chart |
News |
PowerRating) ralled more than 2% after an upgrade from Neutral to Buy at Goldman Sachs. - SLM Corporation
(
SLM |
Quote |
Chart |
News |
PowerRating) fell over 6% today after announcing plans to sell $2.5 billion in new stock to raise money for settling contracts. - Qiao Xing Universal Telephone
(
XING |
Quote |
Chart |
News |
PowerRating) rallied 15% after projecting positive earnings for Q4 after a loss in the previous quarter.
» For a list of today’s highest PowerRating stocks, click here.
|
TradingMarkets 5 Top PowerRatings Stocks for Today |
|
Company
|
Symbol | PowerRatings |
| Claymont Steel | PLTE | 8 |
| Sally Beauty Holdings | SBH | 8 |
| Incyte | INCY | 8 |
| First Consulting Group | FCGI | 8 |
| FuelCell Energy | FCEL | 8 |
| » View More Stocks |
|
TradingMarkets Tracking the Wizards |
Long/Short Funds Yield Mixed Results for Investors – Wall Street Journal
Caldwell & Orkin Market Opportunity Fund, with a 33% gain for the year, is among the winners in the long/short, or “market neutral” fund category. Largest fund in this category, the $4.2 billion Gateway Fund is up 9% in 2007. Bets against housing stocks and subprime lenders helped boost returns.
PIMCO’s McCulley on Market Instability – Pimco.com
Managing director of PIMCO, Paul McCulley pulls a rabbit out of his hat as he discusses market instability, debt and the spectre of deflation in his latest Global Central Bank Focus essay.
PSigma’s Abate Won’t Bet on Recession in ’08 – Fund Strategy
Manager of American Growth Fund sees promise for American companies with significant international revenues. Coca-Cola and Procter & Gamble are among Abate’s picks for stocks that will benefit from growth in emerging markets.
» View Portfolios of Prominent Investors
|
TradingMarkets Playbook |
As we suggested yesterday, a correction should not be of great surprise, given the markets near vertical rally off the December lows.
What we did not anticipate was now the news of the assasination of former Pakistan prime minister Benazir Bhutto would help to fuel and accelerate the corrective process.
Traders, however, should be wary of reading too much into the selling of yesterday. When markets react with panic, as they did on Thursday, it is imperative that traders keep their heads and stick to the gameplan of looking to buy weakness rather than run from it. While that does not mean rushing headlong into the markets as a buyer, it does mean that traders should ask themselves what has really changed and what has not changed in the aftermath of this tragedy in Pakistan.
It is worth remembering that we move toward a 2008 that many pundits have already labelled a recession year. Nevermind the fact that economists–particularly cable television economists–are notoriously poor recession forecasters. Nevermind the fact that the market has been pricing in subprime concerns for going on three months now.
Nevermind the fact that sovereign wealth funds from cash-rich nations like China and many in the Middle East continue to invest in American financial institutions. Nevermind that 2008 will be the fourth year of George W. Bush’s presidential term–fourth years being traditionally very bullish for the markets…
The sellers have had their day, no doubt taking advantage of the often-listless trading between Christmas and New Year’s. And for all we know, the markets will open down big this morning (though the futures are suggesting the exact opposite). But there is every possibility that the sellers, still fighting the last war of the autumn correction, will overplay their hand. If the market is able to fight off any early and/or intraday selling, it may be a more bullish sign than a string of consecutive higher highs.
David Penn is Senior Editor at TradingMarkets.com.
Click here to sign up for the Morning Coffee with TradingMarkets newsletter.