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Be wary of dire market forecasts

The most likely scenario is that the markets will begin to rise from here -- and that bounce is just beginning to take hold.

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Investors are already reacting, and their reactions will have big effects.

By Motley Fool Pick of the Day Aug 17, 2011 5:12PM

By Dan Caplinger

 

Few weeks on Wall Street can match the craziness that last week gave investors. Four days of huge volatility, followed by what seemed like a quiet Friday by comparison with a 125-point jump for the Dow, has everyone on edge.

 

What's next?
In the aftermath, everyone's looking for answers about what's to come. Poring through all the things that investors did during last week's roller-coaster ride yields many different insights:

  • On the commodities front, hedge funds poured into gold and precious metals, but interest in other commodities like base metals and foodstuffs largely evaporated. In particular, copper saw speculative demand drop by more than 60% for the week, potentially boding ill for big copper producers Freeport-McMoRan (FCX) and Southern Copper (SCCO).
 

Statoil is on a roll, announcing its third high-impact discovery this year.

By Jim J. Jubak Aug 17, 2011 4:45PM
Jim JubakFor Statoil (STO), one plus one equaled way more than two Tuesday.

The company has announced that its Aldous and Avaldsnes oil finds are probably part of a single combined oil structure that contains 500 million to 1.2 billion barrels of recoverable oil.

On Aug. 8, Statoil reported that a well drilling at the Aldous Major South prospect had established a common oil and water contact between the Aldous and Avaldsnes oil structures.

This is the Statoil’s third high-impact discovery this year. (A high-impact discovery is one that holds more than 250 million barrels of oil equivalent.)

Shares of Statoil weren’t up much in Oslo on the discovery, but they climbed 3.8% Wednesday.
 
Tags: oil

Sitting out the madness or rebalancing portfolios? MSN Money readers share their strategies.

By Kim Peterson Aug 17, 2011 4:04PM
Image: Investment building blocks (© Comstock Images/Jupiterimages)OK, the lot of you professional traders can hush up for a moment. Let's hear from the investor next door about how to handle this market.

Many of MSN Money's readers have recently shared what they're doing in this topsy-turvy market, and I bet their advice is just as good as any that you'd find from a professional.

On MSN Money's Facebook page, Chris S. says he has been timing major market cycles since 1980. He thinks you can time the market -- but you just can't time it on a short-term basis. "You have to educate yourself and study, and most small investors do not do that," he writes. 

Worries about Pentagon cuts have hit defense stocks hard, but sentiment now appears to be turning.

By MoneyShow.com Aug 17, 2011 3:42PM
By Igor Greenwald, MoneyShow.com

The country’s at war, the economy’s weak, and US weapons are in demand all over the world. You’d think these would be banner days for defense stocks.

Instead, they’ve been shredded like cannon fodder. The equal-weighted NYSEArca Defense Index, which represents the major Pentagon contractors, is down 17% in six weeks.

That’s still nearly triple its value at inception -- 10 days after 9/11 -- which shows what a good decade it’s been for the arms merchants. But all offensives must come to an end, and after some 35 years of purchasing guns and butter on ever-expanding credit, a thriftier nation is considering downsizing to bayonets and margarine, as it were.
 

The current crisis in Europe is a continuation of the financial meltdown that struck the US in 2008, says the billionaire investor, and the future of the euro depends on Germany.

By TheStreet Staff Aug 17, 2011 1:47PM

TheStreet

By Dan Freed, TheStreet

 

The current crisis in Europe is a continuation of the 2008 U.S. crisis rather than a separate event and it is far from over, according to billionaire investor George Soros.

 

Soros made the comments in a interview with German publication Der Spiegel, where he weighed in provocatively on several topics.

 

Asked to compare the 2008 crisis in the U.S. subprime market with the current European crisis, Soros said, "This crisis is still the continuation of the same crisis."

 

The retailer wants 'Jersey Shore' star Michael Sorrentino to stop wearing its clothes. Is this just an ill-conceived publicity stunt?

By Kim Peterson Aug 17, 2011 12:46PM
Normally, companies love it when celebrities wear their clothes or drink their Frappucinos in public.

Not Abercrombie & Fitch (ANF). The apparel retailer is not happy that its clothing is favored by Michael "The Situation" Sorrentino, one of the stars of the reality show "Jersey Shore." And Abercrombie allegedly wants Sorrentino out of its clothes so badly that it's willing to pay him for it.

The company said that it offered Sorrentino a "substantial payment" to wear something else and that it's "urgently awaiting a response." Company shares are down more than 8% Wednesday, by the way.

So what's so wrong, exactly, with The Situation wearing Abercrombie? The company says "this association is contrary to the aspirational nature of our brand" and "may be distressing to many of our fans." 

Chart patterns show the recent price decline is just a correction within a long-term uptrend.

By MoneyShow.com Aug 17, 2011 11:30AM
By Tom Aspray, MoneyShow.com

Copper prices peaked in February as concerns over the growth rate in China, and therefore, the overall demand for copper, was a reason to sell. The Chinese cut back copper imports severely in the spring and prices have continued lower. Copper prices were hit hard last week when concerns over a new recession in the US added additional pressure on prices.

Though copper rebounded sharply from last week’s lows, Germany’s disappointing GDP numbers have increased concerns over the nation’s economy and dampened bullishness.

Chinese imports started to increase in June and recent reports from the London Metals Exchange indicate that Chinese buying has caused the copper inventories to decline in Asian warehouses.

So what’s ahead for copper prices? Technically, the decline from the highs early in the year just looks like a normal correction. Last week’s drop may have marked a panic low in copper prices and copper-mining stocks like Freeport-McMoRan Copper & Gold (FCX).

Let’s look at why another drop in copper prices could provide a good buying opportunity.
 

Star investment managers purchased technology and energy stocks while paring financial holdings.

By TheStreet Staff Aug 17, 2011 11:03AM

By Chris Stuart, TheStreet

 

Wall Street's brightest investment minds were required to release their holdings this week, giving mere mortals insight into their strategies.

 

Here's a breakdown of the top hedge fund and investment managers, and the winning and losing industries and stocks during the second quarter, the latest for which information is available.

 

In financials, Appaloosa Management, a top-performing hedge fund firm run by David Tepper, cut its bank stock holdings by 6%. Tepper reduced his stake in Bank of America (BAC) by 42%. Citigroup (C) is still Appaloosa's biggest holding, as the hedge fund holds 7.2 million shares. In the quarter, the fund trimmed the stake by 5%.

 

Consumer spending, corporate spending and the game-changing iPad are making life difficult for the veteran PC maker these days.

By InvestorPlace Aug 17, 2011 10:26AM

By Jeff Reeves, Editor, InvestorPlace.com


Dude, who's getting a Dell (DELL) these days? From recent financial reports, it looks like only a precious few consumers.


Founder and CEO Michael Dell announced Tuesday a meager growth projection of just 1% to 5% on the year, and Dell shares took a tumble. Shares were off about 8% Wednesday morning.

 

We'll see lower stock prices until large companies say the downturn is only temporary.

By Jim Cramer Aug 17, 2011 8:28AM

jim cramerthe streetSo far, Urban Outfitters (URBN) is in a class by itself in saying that the last 10 days leading up to its conference call were disastrous in at least one of its divisions, Anthropologie. I am still reeling from that startling statement and have tried to back it up with others to be sure that URBN isn't something unto itself.

 

I didn't get it from Home Depot (HD), which didn't have anything negative to say at all. Last night, when talking to Steven Sadove, the CEO of Saks (SKS), I heard that the days leading up to the quarter have been business as usual, consistent with excellent metrics. I didn't hear it from Howard Schultz on Tuesday either, with Starbucks (SBUX) seeing no slowdown.

 

But last night on the Dell (DELL) call we got lots of evidence that consumer demand is "weaker and a bit more uncertain," which translated into a hideous outlook: revenue growth going from a 5%-9% increase, totally respectable, to 1%-5%, completely unacceptable, hence why we are seeing so much selling.

 

Their Urban Outfitters moment, reiterated several times like on the URBN call, specifically identifies "the last few weeks" as the time frame.

 

The projections from South America's largest McDonald's franchiser sound great -- until you look at the inflation battles ahead.

By Jim J. Jubak Aug 16, 2011 5:13PM
Jim JubakJust looking at growth rates, if you want to load up your portfolio with Big Macs, you should buy Arcos Dorados (ARCO) instead of McDonald's (MCD).

On Aug. 1, the largest McDonald's franchiser in South America reported second-quarter earnings of 7 cents a share, 4 cents above estimates. Revenue climbed by 28.7% from the second quarter of 2010. (The company went public in April.)

For all of 2011, the company told investors to expect revenue growth of 22% to 24% -- up from prior guidance of 15% to 17% growth -- and net income growth of 35% to 45%.

Sure beats the 11.3% earnings growth Wall Street projects for McDonald's in 2011.
 

There's a lot riding on the rest of the year.

By Motley Fool Pick of the Day Aug 16, 2011 4:46PM

By Rick Aristotle Munarriz

 

It' going to be an eventful next few months for Sirius XM Radio (SIRI), and most of it should be good. Let's go over a few days that shareholders should already be looking forward to in the coming months.

 

Sept. 23
Sirius XM investors may not take Clear Channel (CCMO) seriously, but the terrestrial giant is investing a lot of might and star power into promoting an upgrade of its iHeartRadio app.

 

Next month, Clear Channel is hosting a two-day music festival in Las Vegas to promote the streaming application's update. Not so humbly self-billed as "the biggest live music event in radio history," magnetic recording stars including Lady Gaga, Coldplay, and Jay-Z are scheduled to take the stage to show the terrestrial radio operator some promotional love. According to Clear Channel, the music festival sold out 10 minutes after tickets were put on sale to the general public in July.

 

Standard & Poor's analysts cut their rating and price target on Google after looking more closely at the Motorola Mobility deal.

By Kim Peterson Aug 16, 2011 4:08PM
Google's (GOOG) plan to buy Motorola Mobility (MMI) for $12.5 billion is not sitting well with analysts.

That $12.5 billion price was a surprising 63% premium over Friday's close. And while there are certainly some pros to the deal -- boosting Android's momentum and cutting out the middle man -- analysts are taking a closer look here.

There is greater risk to the company and the stock now, wrote Scott Kessler, equity analyst from Standard & Poor's. "Despite MMI's extensive and valuable patent portfolio, we are not sure it will protect Android from IP issues," he added in his note, reported by The Wall Street Journal

The soccer team is reportedly considering a public offering in Singapore, perhaps to help its heavy debt load.

By Kim Peterson Aug 16, 2011 3:38PM
You may soon be able to own a piece of Manchester United.

The U.K. soccer team is reportedly looking to raise as much as $1 billion through an initial public offering in Singapore by year's end. Two-thirds of the team's fan base is in Asia, so it's no surprise that its American owners are looking at Singapore, The Wall Street Journal reports.

But before you go jumping into some shares, look at the team's financials in the same way you would any other major company. It has nearly $1 billion of net debt, The Journal reports. It earned $47 million last year before interest and tax, but its interest expense was $119 million. 

Lower volatility and stronger economic data set the stage for additional gains. But there are likely to be bumps along the way.

By Anthony Mirhaydari Aug 16, 2011 3:06PM

The crazy crisis environment of the past few weeks has calmed somewhat. A sense of normalcy is returning. Stocks are up more than 8% off their lows. Volatility continues to be drawn out of the system like snake venom from a wound. Emotions like fear and panic are fading, giving way to a more reasoned approach.

 

Even the economic data are beginning to surprise investors to the upside again. Industrial production in July jumped 0.9% vs. the consensus estimate of 0.5%. June's result was also revised upward. Manufacturing is coming on strong, thanks to a rebound in auto production. Other positive data points include a drop in jobless claims, a rise in labor income and an increase in loan growth as credit standards are eased.

 

Nerves are still raw, however. Witness Tuesday's market drop, driven by renewed concerns over the eurozone. For investors, the question is: Now what?

 

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[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.

Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More


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