Seems that even this shortened week was full of news and happenings, in the U.S. and around the world. With Citigroup Inc. (NYSE: C) being bailed out by the U.S. government at the beginning of the week and China announcing fiscal and monetary stimulus plans, the Dow industrials finished in positive territory four days in a row.
But as analysts and pundits, as well as each and every economic release -- in the U.S. and around the world -- remind us, we are not out of the woods yet and the rally has really been a bear-market rally.
Investors looking to take advantage of such rallies, or at least feel they hold stable long-term holdings, can search this week's BloggingStocks' contributors' picks:
Apollo Group (NASDAQ: APOL) and Devry Inc. (NYSE: DV) -- It's often been suggested that educators do well in times of recession and high unemployment as workers look to improve or change their education to get a better job. Leo Fasciocco thinks these two are poised for a breakout.
Dollar Tree Inc. (NASDAQ: DLTR) reported stronger-than-expected earnings this week and also hiked its forecast. Not surprisingly, cash-strapped consumers turn more and more to discounters. Dollar Tree may continue to benefit from the economic downturn and the stock could also experience a short-squeeze rally.
This post was written by Minyanville contributor Vitaliy Katsenelson.
"You should buy Freeport McMoRan (NYSE: FCX), Caterpillar (NYSE: CAT), PACCAR (NASDAQ: PCAR)." That is what I hear from friends of mine, who are in the biz, all the time. They tell me how cheap these stocks are -- three, six, eight times earnings. "You are a value guy! How come you are not loading up on them?" they ask.
Let me tell you when I'll buy "stuff" stocks (if I ever do, because I've never really cared for the cyclicality of that business). It's when everyone stops telling me how cheap they are and that they are "buys."
These stocks are very similar to housing stocks two years ago: housing stocks were down 50% and looked cheap. Value managers bought just to see their stocks get cut in half again and again.
One needs to subnormalize earnings in this environment for all stocks, but stuff stocks need to see their earnings to be "sub-sub-sub-sub normalized." I've said it before, but it is worth repeating: the global economy just started its journey into a recession, and demand for stuff will drop off the cliff most likely to a lot greater degree than anyone imagines.
TheStreet.com's Jim Cramer says maybe the secret is to do no homework. If only that were the case.
If you want to participate in the rally that went on Tuesday I have a very specific suggestion: Don't do any homework. And don't listen to any conference calls. And don't pay any attention to the Q&As about credit and where it is going to come from and how quickly stretched balance sheets became because of all of the huge buybacks that were going on for so long.
Make sure you only follow Apple (NASDAQ: AAPL) (Cramer's Take), Google (NASDAQ: GOOG) (Cramer's Take) and Verizon (NYSE: VZ) (Cramer's Take) as they had great quarters. Don't listen to Occidental (NYSE: OXY) (Cramer's Take), where the always honest CFO Steve Chazen lays it all out, lays out how so many oil and gas operators will be broken by this decline and the lack of financing available. Don't listen to Whirlpool (NYSE: WHR) (Cramer's Take) where you would learn that the worst recession in appliances in three decades is now morphing into the worst ever, and GE (NYSE: GE) (Cramer's Take) is still trying to sell its appliance division.
U.S. stock futures were lower Tuesday morning, indicating Wall Street is poised for a tough start after the Dow rallied 413 points Monday. Corporate earnings gave way to signs of a thaw in money markets and a possible second stimulus plan helped sentiment Monday. Today it will be all about earnings as several Dow industrials are due to report as well as other big names.
American Express Co. (NYSE: AXP) reported late Monday, saying its profit fell 24% in the third quarter due to less spending by cardholders and as more are having trouble paying off debt. Still, the drop was less than expected and AXP shares are up 4.7% in pre-market trading.
Pfizer Inc. (NYSE: PFE) shares are also trading higher in pre-market -- 2.3% higher -- after it reported results this morning. The world's biggest drugmaker's profit tripled because of higher sales of the pain pill Lyrica and lower costs from the 11,000 job Pfizer had cut last year. The results beat estimates.
Dupont deNemours & Co. (NYSE: DD) shares, however, are trading 1.9% lower in pre-market trading after the chemicals giant cut its 2008 earnings view after reporting third-quarter profit that beat analyst estimates.
Caterpillar Inc. (NYSE: CAT) and 3M Co. (NYSE: MMM) are two Dow components that have also just reported earnings.
4 Dividend Plays to Consider Jim Cramer recommends Heinz, Coca-Cola, Water Management and Caterpillar. Cramer's strategy? Let hedge funds knock these stocks down and then use that an your entry point. http://www.cnbc.com/id/27218316
10 States on the Brink As the financial crisis unfolds and the economy weakens, many states are having a hard time paying their expenses. These ten states have the biggest budget holes and are the worst off in America. Topping the list is Arizona followed by California, Florida, Nevada, Rhode Island, Virginia, South Carolina, New York, New Hampshire and Alabama. http://www.cnbc.com/id/27201866
If you break the cycle of short-and-no-cover, you can win.
I know that wasn't the purpose of the Anglo-French plan that we were dragged into, but it will be the effect, and the effect will be electric.
Let's just take an obvious example: State Street (NYSE:STT). This is a longtime conservative trust bank that is an important custodian for life savings and for mutual funds. For a year now it has been under assault as an institution that has too much leverage in hard-to-value asset-backed instruments. The idea that a custodian could fall apart is something that shakes every money manager to his core and causes him to take his money out of cash and put it in T-bills. That's been going on for ages now, and I know money managers who are scared to death to keep their money "in the system," which is State Street, something that instills panic across the board.
When you hear that and you are a short-seller you know what to do: You plunk down $25 million to buy credit default swaps to wager against the firm's debt, then you buy position limit puts and then you short the stock along with all of the other like-minded souls you talk to every day. You get the stock rolling downhill, then you buy a second set of swaps, paying double the price -- doesn't matter what the vig is when you know you are going to win -- and then you call the media and you tell them that everyone's pulling their money out of State Street and the credit default swaps are spiking huge and then the media goes out and reports on it. The company is helpless to refute it as the problem is being caused by the sellers because it is pretty much business as usual in a very tough time, and the stock gets hit again. Other hedge funds get wind, they short it down further, longs panic and then the credit agencies put the company on notice because where there is smoke there must be fire. Then the clients pull as much money out as possible and voila, the end of State Street.
We have seen this run several times. Frankly, I don't know how State Street stayed in business.
Until this morning, the only policy that had been put in place to stop this destruction of capital by the shorts -- and I fully concede that State Street may have made mistakes, but I will not concede that those mistakes should have made it be wiped out -- was an out-and-out short-selling ban. That was ludicrous, but what do you expect from this SEC that eliminated the uptick rule right in the teeth of the greatest bull market and allowed naked shorting to go on illegally?
The Federal Reserve has had a large role in determining which banks and brokerage firms stayed in business. Now it may have to make a similar set of decisions about big corporations.
According toBloomberg, "Federal Reserve Chairman Ben S. Bernanke may find the next fronts of the financial crisis to be just as chilling as last month's downfall of Wall Street titans: its spread to corporate America and state and local government."
Large companies including Caterpillar (NYSE: CAT) are having to pay huge premiums for debt or tap lines of credit. The Fed has the ability to lend cash to non-financial companies, but the dilemma raises the old question of which firms will make it and which will not. It is similar to the decisions it made with financial firms like Bear Stearns.
It is clear that there is not enough money to go around as hundreds of fairly sizable corporations cannot get loans. The Fed is unlikely to have the capital to help them all.
That means there will have to be some litmus test for who is helped like corporate revenue, number of employees, whether the company is in a strategic industry like defense, and so on.
Which would you save?
Douglas A. McIntyre is an editor at 247wallst.com.
The Dow Jones Industrial Average plunged 336.43 points, or 3.26%, to below 10,000 -- 9988.95 -- for the first time in four years, since Oct. 29, 2004. Similarly, the S&P 500 dropped 3.66% and the Nasdaq declined 3.97%. As investors looked for safety they sold stocks and piled into government bonds.
As expected, Wall Street joined a global selloff today as the financial crisis seemed to have deepened, especially in Europe. In addition, fears of a global economic slowdown dampened investors mood further. The expected boost from the $700 billion bailout plan approved Friday was non-existent as the weekend was full of news from Europe regarding the cascading financial crisis.
The financial crisis and the economic slowdown are now hitting the next set of stocks like Aluminum giant Alcoa Inc. (NYSE: AA) -- down about 8% -- or Caterpillar (NYSE: CAT) -- down over 5% -- both companies expected to have difficulties either accessing funds or suffer from the global economic slowdown, or both. News of eBay (NASDAQ: EBAY) -- down 5.5% -- laying off over 1,000 employees didn't help, only served as a reminder of the bad employment numbers from Friday and the expected worsening conditions in the jobs market.
TheStreet.com's Jim Cramer says without the Paulson plan, every component is in trouble. Let's take a look.
Without the Paulson plan, or if the plan is so watered down and delayed, I have been saying all bets are off and we could be in for a huge swoon. How huge?
I like to sit down and noodle on the actual components of the Dow Jones Industrial Average to give you a real sense of what can go wrong. And there is so much going wrong. The credit markets are vanishing, the earnings are vanishing and the only hope is a plan that ignites credit markets, forces money off the sidelines and gets this economy and the worldwide economy moving again.
Not long ago, I postulated that this market is literally repealing all of the moves since the Brazil-Russia-India-China emergence that gave us better markets to sell into than just the U.S. With the collapse of Chinese growth -- they have simply ceased to be importers since the summer -- the inflation in India, the war in Russia and a U.S.-led slowdown in Brazil (although that remains a robust market) BRIC is more like having a brick around your neck than a wind at your back.
Meanwhile, the peak in energy and the collapse of the financial system have left both of those groups in disarray with valuations simply too difficult to pin down, so you retreat to worst-case scenarios where you can at least find some terra firma -- mainly where stocks were last time things were this bad.
Terex (NYSE: TEX) is recently trading at $42.50 in pre-open trading, below its close of $47.32. TEX lowered 2008 EPS view to $6.35-$6.65 from $6.85-$7.15. TEX overall option implied volatility of 50 is near its 26-week average according to Track Data, according to Track Data, suggesting non-directional price movement.
Agco (NYSE: AG), global manufacturer of agricultural and construction equipment, closed at $56.10. AG overall option implied volatility of 49 is near its 26-week average, suggesting non-directional price movement.
Deere (NYSE: DE) closed at $66.53. DE overall option implied volatility of 40 is near its 26-week average according to Track Data, suggesting non-directional price movement.
CNH Global (NYSE: CNH), an agricultural and construction equipment manufacturer, closed at $35.17. CNH overall option implied volatility of 54 is near its 26-week average, suggesting non-directional price movement.
Caterpillar (NYSE: CAT) closed at $67.73. CAT October option implied volatility of 32 is near its 26-week average according to Track Data, suggesting non-directional price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Piper Jaffray downgraded Washington Mutual (NYSE:WM) to "sell" from "neutral", according toBriefing.com. The news service also reports that Citigroup cut VMWare (NYSE:VMW) to "hold" from "buy" and cut its price target to $33 from $52.
Deutsche Bank downgraded TRW (NYSE:TRW) to "hold" from "buy", according toMarketWatch.
Caterpillar (NYSE:CAT) Cut to Neutral at JPMorgan according to 24/7 Wall St. The financial website also reports Target Corp. (NYSE:TGT) Cut to Neutral at Credit Suisse.
Hank Paulson led the charge this morning talking about the need and credibility of the GSE's. Oil was up for a while but after Tropical Storm Dolly headed further south than the oil and gas infrastructure that locked in heavy oil selling. The major focus continues to be earnings and financial stocks in particular. Below are today's unofficial closing bell levels: DJIA 11601.60 (+134.26) S&P500 1276.80 (+16.80) NASDAQ 2303.96 (+24.43) 10YR T-Note 4.097 (+0.03%) 52-Week Lows Top Analyst Calls
American Express Company (NYSE: AXP) was one of the more poor financial stocks today after the company choked on earnings last night. It is also facing deteriorating business despite it being thought of as the highest quality credit card around. Shares were down 9.2% at $37.13 in today's final minutes.
Town Bankruptcy Bad Sign for Other Towns The mortgage crisis, the limping economy and a recent bankruptcy filing by Vallejo - the first municipality to do so since Desert Hot Springs, Calif., in 2001 - have hobbled this town of 120,000. Vallejo's closely watched Chapter 9 bankruptcy filing in federal court in Sacramento may be a warning sign of dangers that could befall other cash-strapped municipalities. Economy hobbles Calif. town - USATODAY.com 10 Funds Suffering the Biggest Exoduses Which mutual funds are seeing the biggest outflows in 2008? They include some very well-known popular funds like Fidelity Low-Priced Stock, American Funds Investment Company of America and the Legg Mason Value funds. The 10 Funds Suffering the Biggest Exoduses
Stocks futures are lower Tuesday morning, indicating U.S. stock markets will start on a down note following weak outlooks and disappointing financial results from several companies including Apple and American Express. With oil steady and no economic data out today, Wall Street will focus on earnings.
Apple Inc. (NASDAQ: AAPL) reported after the close Monday a record quarter that beat analyst estimates, posting a 31% surge in earnings. Mac and iPod sales satisfied investors, while iPhone sales were somewhat on the lighter side. What concerned investors most was the very weak guidance Apple gave, which was weak even by Apple's standards of lowballing. Other issues included margin squeeze and Jobs health. Apple shares were 10% lower in Frankfurt and premarket trading. American Express (NYSE: AXP), said late Monday its second-quarter results fell 38% due to the weakening economy. The company, which missed projections, caters to the more affluent who have good credit, and yet even this company felt the pains from the slowing economy. AmEx earned 56 cents per share compared to estimates of 83 cents per share. The company's stock tumbled AXP shares are down over 12% in premarket trading.
Also reporting Monday after the close were Merck & Co., Inc. (NYSE: MRK), Texas Instruments (NYSE: TXN) and SanDisk (NASDAQ: SNDK). MRK shares are down over 6.6% in premarket trading as the company said it would stop give guidance of results. TXN shares are also declining over 10.5% in premarket trading after it gave a disappointing forecast. SNDK shares are plunging over 16% in premarket trading after it swung to a Q2 loss, missing analyst estimates.
This morning we'll have another wave of earnings, and already started were DuPont and Wachovia.
Seems that even this shortened week was full of news and happenings, in the U.S. and around the world. With Citigroup Inc. (NYSE: C) being bailed out by the U.S. government at the beginning of the week and China announcing fiscal and monetary stimulus plans, the Dow industrials finished in positive territory four days in a row.
"You should buy 
U.S. stock futures were lower Tuesday morning, indicating Wall Street is poised for a tough start after the Dow rallied 413 points Monday. Corporate earnings gave way to signs of a thaw in money markets and a possible second stimulus plan helped sentiment Monday. Today it will be all about earnings as several Dow industrials are due to report as well as other big names.
Terex
Here are some highlights from this past week's 
Bush administration ignored regulators' warning of mortgage meltdown
Cramer on BloggingStocks: Any downside should now be muted 
Citigroup bailout sheds light on just what the taxpayers are buying
