The US isn't strong enough not to care about them now. But one day it will be, Jim Cramer says.
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Two of Big Pharma’s finest are looking quite oversold at current levels, and while risk remains, both pay handsome yields and maintain sky-high cash positions.
Faith in Treasurys remains strong as investors seek out safer assets.
By Chao Deng, TheStreet
Uncertainty about the health of the global economy has rattled investors, heightening the attractiveness of Treasurys as a haven asset. The benchmark 10-year note was last rising 25/32, diluting the yields to as low as 2.48% in early trading Monday.
The market had anticipated the move by Standard & Poor's before the ratings agency made its downgrade announcement late Friday. Many analysts are noting that the decision does not make a fundamental difference to how investors view Treasurys.
Pervasive pessimism calls for the brave to consider purchasing shares that have been punished too harshly.
By Chris Stuart, TheStreet
Standard & Poor's downgraded America's triple-A credit rating for the first time Friday, almost $1 trillion was wiped off the benchmark S&P 500 Index ($INX), and a key jobs report confirmed the economy is limp.
With stocks having strongly rebounded from their March 2009 lows and the Federal Reserve predicting accelerating economic growth in the second half of this year, expectations had been high just a few months ago. Instead, stocks are now down more than 10% from this year's peak -- producing the first correction in more than two years -- throttled by Thursday's 500-point-plus nose dive in the Dow Jones Industrial Average ($INDU) that did as much emotional damage as financial.
Sure, the news is grim. But it would be foolhardy not to take a step back and see if there are any opportunities in the stock market. And even though confidence in Fed chief Ben Bernanke, President Barack Obama and Congress is shaken, chief market strategists at 13 big banks forecast the S&P 500 will rise 17% through Dec. 31, the average estimate in a Bloomberg survey taken Friday.
So let's step away from the scary R-word -- recession -- for a minute and assess the damage that has been done. I screened stocks over the past 10 days that have fallen more than 10% and may have been unfairly punished. Here are at least four companies that are worth another look:
As markets tumble, a fund manager recommends shares of 10 companies, including AT&T, Verizon and McDonald's.
By Robert Holmes, TheStreet
Oliver Pursche, the manager of the $20 million GMG Defensive Beta Fund (MPDAX), said one of his largest clients phoned him late Thursday, concerned about the sharp sell-off in equities. Like most individual investors who were lost and blindsided by the bleeding, Pursche's client was looking for direction.
"He was very nervous. He wasn't quite freaking out, but he said, 'Oliver, this is one of the times I need you to tell me everything is OK,'" Pursche said by phone Friday from his office in Suffern, N.Y.
In the time since that broad drop in stocks Thursday, uncertainty about the future has been ramped up after the decision by Standard & Poor's late Friday to strip the U.S. of its prestigious triple-A credit rating.
Will a market collapse be followed by a recovery rally or a crash?
A modest sell-off became a landslide last week as stocks lost more than 7% in the five days of trading. Soft economic numbers and concerns about debt issues in Europe trumped strong earnings. The coup de grace came after the market closed when S&P downgraded U.S. debt.
Some, especially those that believe the sky is falling, say the move was entirely predictable and the start of something worse (or a mere continuation of the collapse that began in 2008).
I disagree entirely. What we are seeing now is fear based selling. It is a manufactured crisis that may very well become a self-fulfilling prophecy. Whatever the case may be the reality is that stocks are falling, but now is not the time to panic.
I missed the sell-off for sure, but I don’t want to miss the recovery rally. Stocks are cheap and at the top of my buy list is the iShares Russell 2000 (IWM).
Fight your instinct to call something big. Wait until the major indexes fall 2% to 3% before taking out your shopping list.
Operative terms: There will be no heroes Monday, and there are no medals for trying to be one. Buried within every trader's heart is a desire to call something big, to see things no one else sees and to recognize opportunity.
Those would all be good signs, but even seeing something no one else does requires the possibility of something new happening. As we look at the landscape from Friday's close of trading, nothing surprisingly good has happened at all. There's no coordinated policy shift in Europe beyond the much-rumored secondary-market bond buying. Further, of course, we have to deal with the panic stemming from the Standard & Poor's downgrade.
It's just more of the same, with the Congressional mess, the stock market's mess and the safe haven status of Treasury bonds remaining unchanged
By Jeff Reeves, Editor, InvestorPlace.com
After the S&P downgrade of U.S. debt, America now carries a rating of AA-plus instead of the coveted AAA rating on its Treasury bonds. Austria, Norway, Germany and Australia are no longer our peers ratings-wise – we are, instead, in the company of Japan, China, Spain, Taiwan and Slovenia.
Market watchers have suspected a downgrade was in the works for a while. Not to toot my own horn, but last week in my column about 5 ugly truths about the debt ceiling, one of my takeaways from the deal was that a credit downgrade was in the works regardless of the fact we avoided default. Looks like my prediction, and the prediction of other financial journalists who made the same call of a credit downgrade, didn’t take long to come true.
But now that the inevitable has happened, what does it mean for the market and for individual investors?
Standard & Poor's cuts the US credit rating from AAA for the first time in history on political bickering and budget largess.
We knew it was coming. But it was still a shock. Late Friday night, credit analysts at Standard & Poor's downgraded the U.S. sovereign debt rating to AA+ and warned that a cut to AA is possible within the next two years. The cut means that instead of ranking with most of the world's strongest economies -- those of Austria, Norway, Germany, Australia and others -- we now join AA credit risks including China, Bermuda, Kuwait, Slovenia, Spain and Qatar.
The problem was the debacle that was the debt ceiling debate. As part of the deal, analysts at Standard & Poor's were looking for $4 trillion in cuts over 10 years. Congress gave them a little more than half of that through gimmickry, untested "committees" and a political sideshow that didn't exactly instill confidence.
After S&P analysts took such a specific public position on the budget debate, I didn't see how they could walk away from their threats now. Not after the bugling of the rating agencies during the housing bust. Not after their poor performance heading into the eurozone crisis. And while competitors Moody's and Fitch reaffirmed their AAA ratings this week, S&P did the inevitable: It called us out.
China lifts the ban on price increases in cooking oil. Believe it or not, that's significant.
Losing trades happen, especially in a crazy market like we had this week
I have no problem shining a spotlight on earnings trades that have gone wrong. It doesn’t happen often, but losers are inevitable. Even this earnings season where my winners are beating the losers 2 to 1, you are destined to miss the mark when trading corporate profit news.
One earnings trade that went wrong was Priceline (PCLN).
The on-line travel reservation company is up an impressive 9% on Friday after reporting strong earnings results. This performance in the midst of a market meltdown is particular stunning.
When I make recommendations to trade a stock in advance of earnings I do so mostly on the long side. That said there is money to be made selling stocks short that I believe to be over-valued and likely to report weak results. Given the uncertainty in the market heading into the last week such an approach seemed to be the perfect way to go.
There are other safe havens for certain, but my focus is on earnings and there are only two ways to go when a company is set to report results: long or short.
Yahoo has a punctuation problem, nursing shares fall ill and Washington offers up a double dose of debt ceiling stupidity.
By Gregg Greenberg, TheStreet
5. Yahoo!'s punctuation problem
Are we alone or does anybody else think it's long past time to yank the exclamation point from Yahoo! (YHOO) and replace it with a question mark? Because it's a mystery to us how these guys continue to operate the way they do.
Alibaba Group, the Chinese internet giant which is 43% owned by Yahoo!, will potentially reap up to $6 billion in a spin-off of its Alipay e-payment division under a deal announced last Friday. Alibaba will pocket no less than $2 billion in proceeds if Alipay goes public or cashes out in some other type of "liquidity event." Shares of Yahoo! initially popped on the long-awaited transaction, but finished the day 3% lower as investors failed to figure out what's in it for them. And as we are constantly reminded, the market hates uncertainty.
As for us, we just hate stupidity. And from our vantage point this whole puzzling transaction seems tilted in that direction. Read more
Expectations of such a move after Friday's close helped pummel stocks in morning trading. Here's what it could mean.
But others thought a downgrade was inevitable, particularly after S&P placed the country's perfect AAA credit rating on "CreditWatch negative" on July 14. That status generally means the agency will make some ratings move within 90 days. The rumor was resonant enough that it helped punish stocks in early trading Friday.
While it's almost over, price damage calls into question the 3-year-old bull market.
It's been a brutal few weeks in the stock market, with Thursday's loss being the worst single-session slump since the final drop into the March 2009 bear market low. It was a wipeout driven not by any particular catalyst but by a general sense that the recovery is sputtering -- and rich world governments are powerless to do anything about it.
Since July 21, the Dow has fallen for nine of the past 10 sessions and lost more than 1,340 points, or 10.5%. All of the major averages are in negative territory year to date. My newsletter subscribers were perfectly positioned for the drop: Month to date, the Edge Portfolio is up 5.9% versus an 8.4% drop for the S&P 500.
Now the question is: When does it all end? To answer that, we first need to understand what's driving the sell-off. Then we'll look at a few technical clues that suggest a major shift is under way. Here's why.
The VIX, a common indicator of market gloom, rises beyond the 'uh-oh' threshold of 30.
Investors look at the VIX as an indicator of volatility expectations for the next month. It's a good way to gauge investor sentiment, and this week it's saying that investors are scared and think it will just get worse.
This is after a jobs report Friday that was better than expected. Payrolls rose by 117,000 last month, far outpacing the 85,000 economists had estimated. The unemployment rate fell to 9.1%. But the good news didn't last long with investors who were uneasy about Europe's economic problems and the possibility of a renewed recession in the U.S.
These companies, all of which went public in 2011, have so far overpromised and underdelivered.
By Debra Borchardt, TheStreet
Many IPOs win over investors by promising growth. It's an easy promise. We all want to do well, right?
Sure, a company wants to open 100 stores. Of course, a manufacturer wants to sell millions of widgets. If that doesn't happen according to plan, that's alright because the disclosure language in IPO filings always includes a risks section that basically states everything can go wrong.
Many times new IPOs have private equity companies, who are just looking for a profitable exit, promoting all the positives while brushing off any criticism.
Here are the worst offenders of IPO companies that have promised much and delivered little:
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Improving the US's internet infrastructure would be a costly undertaking, but government regulation could help boost connection speeds and competition.
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[BRIEFING.COM] The major averages have regained their early losses with the Nasdaq (+0.5%) maintaining its outperformance thanks to the relative strength of the technology sector (+0.6%).
Outside of technology, another influential sector, health care (+0.5%), is also among the outperformers. Biotechnology has played a factor in the relative strength as the iShares Nasdaq Biotechnology ETF (IBB 262.82, +2.32) trades higher by 0.9%.
Although two of the three top-weighted ... More
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