Morning Coffee with TradingMarkets

  • January 11, 2008
  • David Penn

Good Morning!

Stocks Rally On Bernanke Comments…WalMart Shines in 4Q…Bank of America
to Acquire Countrywide…Infosys Profit Up 25% …Does Follow-Through Close Mean
the Bottom is In?…American Express Downgraded by Goldman…Will JP Morgan Buy
WaMu?…Merrill Taking $15 Bn Writedown…Tough December for Retailers …

Asian stocks down. European stocks down. Dollar moving higher against the
Euro, lower against the yen. And the futures are trending lower in the hour
before the bell … Positive comments by Ben Bernanke helped the markets stage a
strong rally yesterday, and provided the market with the follow-through close
many investors and traders were looking for. The question of follow-through to
the upside remain. Will Bernanke’s comments and deals like Bank of America’s
pending purchase of Countrywide be enough to help change investor psychology on
the final trading day of the week?

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TradingMarkets 5 Business Stories You Need to Know



Wal-Mart’s Winning Christmas Season –
Fox Business News

While many retailers reported disappointing fourth quarters, Wal-Mart stood out
as one of the few to see profits rise as shoppers were attracted by the store’s
discounting and cheaper groceries. Greater sales on lower margin products like
pharmaceuticals also credited for the postive quarter.



Fed to Markets: Ben Bernanke’s Got Your Back –
AP

Widely criticized for indifference to falling equity markets, growing credit
crunch, and recession fears, Fed chairman Ben Bernanke asserted yesterday that
he would take “substantial action” to support economic growth. Comments follow
Fed President Poole’s dovish rate talk from the previous day.



Mergers Considered in Airlines Business –
Wall Street Journal

Delta pondering whether or not to pursue merger talks with Northwest Airlines or
United Airlines parent corporation, UAL. Rising fuel costs part of painful
reality for airlines, and mergers are increasingly seen as a way for the
industry to make the best of a bad situation. Our PowerRatings show the Regional
Airlines industry group to be a much better group than Major Airlines, with the
latter filled with lower PowerRating names.



BofA Buying Countrywide – Wall Street
Journal

Preliminary talks are already underway for Bank of America to be America’s
biggest–and potentially most troubled–mortgage lender. Bank of America looks
to complete deal by the third quarter of 2008, which will cost the company $4
billion. Bank of America is one of the bigger banks in the Money Center banks
category, but as far as PowerRatings are concerned, there are at least two money
center bank with stocks that are more likely than Bank of America to be higher
one year from now.



AMEX Lowers First Quarter Expectations – Bloomberg

American Express to report fourth quarter charge of $275 million due to
increased customer defaults. Stock fell 9% in European trading as Goldman Sachs
downgraded American Express shares. American Express is a member of the top
PowerRated Credit Services industry. And despite the company’s woes, there may
not be many better options for investors in the group.

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
Waste Industries USA WWIN 9
Electronic Clearing House ECHO 9
Talbots, Inc. TLB 8
SanDisk Corp. SNDK 8
Priceline.com PCLN 8

View More Stocks

TradingMarkets Tracking the Wizards

Quantitative
Investment Management Up More than 28% for Year –
FINalternatives

Diversified futures trading strategy saw gains in 11 out of 12 months. Metal was
sole underperforming sector in fund’s Global program, which was up 1.15% in
December alone. Fund assets during year skyrocketed from $527 million to $2.7
billion.

Ackman’s Fund Up
22% in 07 – FINalternatives

Still confident in his bet against MBIA, Ackman and his hedge fund, Pershing
Square Capital Management, returned a superlative 22% in 2007. Ackman continues
to increase his funds investment in leading retailer, Target.



Blackstone Buy GSP Capital Partners –
Portfolio.com

$930 million is the price tag on GSO Capital Partners, which the world’s largest
buyout firm, Blackstone paid in what observers say is one sign that the worst of
the credit crunch in behind us. GSO Capital Partners is a hedge fund
specializing in debt instruments.

View Portfolios of Prominent Investors

TradingMarkets Playbook

There are a number of high PowerRatings stocks showing up this morning, which
suggests that traders will have plenty of opportunities to buy weakness in spite
of yesterday’s strong rally. Traders should be very alert to the possibility of
selling, particularly early–given the negative tone of the futures this
morning. Again, what will be important will be the reaction to any selling. We
won’t know whether or not market psychology has truly shifted until we see how
buyers withstand the first few efforts by sellers to drive the market lower.

Friday’s have not necessarily been kind to the markets, as traders have shied
away from long exposure over weekend. So the potential for selling both early
and late is high enough for traders to be both watchful and wary of it.

David Penn is Senior Editor at TradingMarkets.com.

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