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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Keep an eye on funds that track banking, retail and natural gas.
By Don Dion, TheStreet
This week's earnings season kicks off with Alcoa (AA) reporting on Monday. In the following days a number of notable U.S. firms will follow suit, providing investors with insight into various sectors. Financial goliaths JPMorgan (JPM) and Bank of America (BAC) will be in the spotlight on Wednesday and Friday respectively.
ETF investors looking for an attractive way to track these two companies and other banking industry players during the earnings season should turn to the KBE, which also sets aside a heavy portion of its portfolio to smaller, regional players.
Strong earnings should push stocks higher, at least in the short term.
Stocks took a pause last week as investors waited for earnings season to begin in earnest. This week begins the period when publicly traded companies release operating performance for the previous quarter.
Expect the numbers to be better than Wall Street estimates. The positive results will be the fuel the market needs for the next leg higher.
The economy is on more solid footing. More jobs are being created, and growth for the first quarter is all but assured. In such an atmosphere, profits should be robust.
About the only overhang is inflation, but inflation is a lagging indicator and should have minimal impact on first-quarter numbers.
I want to be bullish with my 5 ETF picks this week. The one fund investors should key on is the SPDR S&P 500 (SPY).
The animosity in Washington and oil's relentless rally are intractable problems that will weigh on US stocks until July. Look for companies that are barely American to escape the morass.
We are stuck with Washington until July. That's when the money runs out for the debt ceiling. I suspect the hatred and mistrust among the Republicans for President Barack Obama this close to next year's election will make the issue as threatening to the markets as the price of oil. And who knows what will happen in earnings season.
Oil and Washington are two intractable problems that could make the morning macro picture as difficult -- and perhaps as bleak -- as we have seen it in a very long time.
Think of it like this: If you thought it was easy to be negative and raise cash for every dollar that oil increases, you can only imagine how difficult it will be with Tea Party people, an unsophisticated lot, basically calling for a Grecian-style budget crisis. Let's see, Democrats unwilling to cut substantially and to raise the tax for rich people versus Republicans who allegedly want draconian cuts and Tea Partyers who want a default, or at least would drive us to that.
Put that mix together and you have the front page of the paper from now until July. The only thing that would make this go away is a compromise, and it is too close to the election for compromise.
I gave a presentation on China/Japan at the “Rethinking Seminar” at Johns Hopkins University Applied Physics Lab. It was a slightly surreal experience, because the presentation was right across the street from the Pentagon.
I gave a presentation on China/Japan at the “Rethinking Seminar” at Johns Hopkins University Applied Physics Lab. My presentation was videotaped; video (both streaming and download), audio, and even cliff notes may be found here (by the way, make sure to take a look at other presentations on their website). Also, I updated my slides on China/Japan; you can download them here.
It was a slightly surreal experience, because the presentation was right across the street from the Pentagon. So the Russian immigrant who until 1987 believed Americans were horrible people (read the story of how my family emigrated from Russia) was lecturing Americans on the virtues of capitalism at the doorstep of the Pentagon!
Here are some random thoughts on subjects unrelated to investing.
The airline moved on its own to ground flights after a 5-foot-hole appeared in one plane. Could this be a model for other airlines? With video.
The airline moved quickly to ground dozens of planes, irritating customers and making the fiasco even bigger. Was that a little much? No, experts say. Southwest is now getting praised for the way it handled the incident, and some observers say the airline's actions could set a new standard for the way the industry responds.
Usually when something like this happens, airlines wait to hear from regulators and airplane makers before grounding flights, The Wall Street Journal reports. But Southwest didn't wait for advice from Boeing (BA) -- a good move, since Boeing wasn't sure what was going on -- or the government.
Post continues after this video discussing the way Southwest handled the crisis:
Home loan processing could be affected.
By Maria Woehr, TheStreet
A government shutdown would curb mortgage processing at some large banks, especially if Uncle Sam went dark for an extended period.
A spokesman for the Federal Housing Administration told TheStreet that if the government does shut down, it "will not be able to endorse any single-family loans, and staff will not be available to underwrite and approve new loans."
The FHA backs a large swath of the single-family and multifamily mortgages in the U.S. that are eventually underwritten by private banks.
Recession aftershocks send vacancies to their highest level in more than a decade.
This spring has seen mall vacancies hit their highest level in 11 years, The Wall Street Journal reports. The vacancy rate is a surprisingly high 9.1%. The situation is really miserable at strip malls, where the vacancy is forecast to surpass 11% later this year -- the highest level in 21 years.
Luckily, major mall operators like Simon Property Group (SPG) and Taubman Centers (TCO) have managed to escape this downward spiral. The real problem, the Journal reports, lies in those strip malls that were built in the suburbs during the housing boom. Builders thought houses were coming, so they got out first with sprawling retail sites in developing neighborhoods.
A fine idea, but then the financial crisis hit and all those housing plans ground to a halt. That left a lot of empty storefronts in neighborhoods that never lived up to their potential.
It's tough out there for the greenback as slower growth, Fed abuse, budget fights and rising inflationary pressure send the currency tumbling to new lows.
The U.S. dollar sliced below its recent trading range Friday as a big batch of negative catalysts weighed on the currency. Some of this is due to the malignant neglect of the currency at the hands of the Federal Reserve. And some of it is due to Thursday's interest-rate hike by the European Central Bank, the first rich world central bank to tighten policy since 2008.
With the Europeans joining monetary authorities in places like China and Brazil by embarking on an anti-inflation rate-hiking campaign, only the Fed and the Bank of Japan are left sitting still. That weakens the dollar as investors move into currencies that offer higher interest rates. Plus, it looks like U.S. economic growth is set to slow because of the ravages of food and fuel inflation and the damage it's causing to consumer sentiment.
As a result, the team at Standard Chartered, who market themselves as experts on currencies, believe the dollar will continue to move lower through the summer before finding support in the second half of the year once the Fed's $600 billion bond-buying program ends in June. As for a more sustained rebound for the greenback, don't look for a strong dollar until 2013 or 2014 at the earliest. Here's why.
The European Central Bank raises its benchmark interest rate ahead of the Fed for the first time in 4 decades.
See why this household name is worth a look.
By Jason Moser
It seems like everywhere I look in my house, I find some type of Clorox (CLX) product. From the kitchen to the bathroom and everywhere in between, life needs to be cleaned, and trash taken out. So like Peter Lynch, I'm buying what I know, and adding some earnings (and cleaning) power to my portfolio.
Not long ago, I took a cursory glance at Clorox as a potential dividend play; it has a well-known catalog of products and brands. Ironically, though, I think its ubiquity causes many to simply overlook it. The company has been in business for close to 100 years, generates copious cash flow, and pays a 3.1% dividend to boot.
With brands such as Glad, Hidden Valley, and Kingsford charcoal -- not to mention its namesake bleach, and cleaning products including Formula 409, Liquid-Plumr, Pine-Sol, and Green Works -- Clorox has a tremendous reach.
If things close down temporarily, it might show we can do the same with less, a fund manager says. Plus: Video on the budget stalemate.
By Robert Holmes, TheStreet
During the very public battle between then-President Bill Clinton and Speaker of the House Newt Gingrich, expectations were that the stock market would be crushed as Americans lost confidence in the ability of the government. In addition, after threats Gingrich made about refusing to raise the debt ceiling for the Treasury Department, there were fears interest rates would head higher.
Singer says the major networks began scrambling to find video footage of a tangible change in function of the government to show U.S. viewers. The results, Singer says, were unintentionally hilarious.
The controversy over David Sokol's resignation from Berkshire Hathaway has overshadowed the Oracle's recent remarks on other topics.
By Don Dion, TheStreet
The controversy swirling around David Sokol's questionable actions leading up to his resignation from Berkshire Hathaway (BRK.A) has continued to rage, making it easy to forget that the Oracle of Omaha had been making headlines with his comments regarding a number of hot-button topics.
In recent weeks, investors have been given strong insight into Buffett's mind as he has expressed his opinions on the future of the euro and the long-term prospects of online social networking. While controversial at times, his comments further aid investors, market commentators and Buffett fans as they work to better understand how the world's most famous investor thinks.
As nations such as Spain, Portugal, Greece and Ireland have struggled to rein in their looming debt crises, debate among many market commentators and analysts has focused on the long-term outlook for the euro.
As demand for coal, autos and lumber increases, this well-run rail company can add cars to each train without increasing labor or fuel costs.
There's lots of dispute out there about whether margins have peaked. I know our own Doug Kass has argued mightily that the great margin expansion is over.
CSX is one of the best-run companies in America. The margins went from 25% to 29% last year. That's an incredible acceleration from previous years.
Yet there's Ward again talking about how margins have nowhere to go but up. He ticked off a bunch of factors: newer hubs that cure bottlenecks, including a brand-new operation in Northwest Ohio; more coal exports, which means many more train cars moving coal to the ports than the year before; and further efficiencies when it comes to intermodal traffic.
The magnifying glass of the media is focused on David Sokol, but should be directed at Buffett as well. Unfortunately, reputation is often destroyed by appearances.
I was quoted in the Financial Times recently about David Sokol, chief executive of a Berkshire Hathaway (BRK.A) subsidiary who bought shares in a chemical company a few months before Berkshire acquired it at a significant premium. Sokol made $3 million on his $10 million purchase of Lubrizol stock.
"Any time you buy stock in a company which your employer then buys just does not smell right," I told the FT.
This quote slightly misstates my view, as the issue here is more complex. Sokol was the chief executive of Berkshire subsidiaries MidAmerica and NetJets. It's not his job to look for companies for Berkshire to buy; Buffett and Munger are in charge of Berkshire’s capital allocation decisions. Sokol bought Lubrizol for his own account because he liked the business and thought it was attractively priced.
If Sokol had never mentioned Lubrizol to Buffett, there would be no controversy today. But he did, while disclosing that he owned the stock. Buffett reportedly expressed little interest in Lubrizol at the time.
Two, six, eight, who do we appreciate? A company that does complex things extremely well.
By Rex Moore
II-VI (IIVI) (pronounced "two-six") is really in the business of expertise -- expertise in dealing with incredibly complex materials and high-precision components. That right there should perk up your investing ears, because it suggests a core competence that competitors can't easily duplicate. I'm impressed enough to be adding shares to my real-money Rising Stars portfolio.
The company's products serve variety of industries, from medicine to the military. Many of them are laser-related, used for cutting, drilling, welding, and even detecting shoulder-launched missiles aimed at low-flying aircraft. II-VI also produces the compound semiconductor materials required for these components to operate, including selenium, tellurium, and silicon carbide. (In fact, the company took its name from columns II and VI of the Periodic Table of Elements, which combine for compounds such as cadmium telluride and zinc selenide.)
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Like many companies this winter, the fast-food giant blamed a drop in same-store sales on the weather. But could its problems be bigger than a snowbank?
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[BRIEFING.COM] The major averages began the new trading week on a slightly lower note with small caps leading the weakness. The Russell 2000 shed 0.3% while the S&P 500 slipped less than a point with six sectors ending in the red.
Equity indices began the day in negative territory with only the Nasdaq (-0.04%) making a very brief appearance in the green. After sliding through the first hour of action, the major averages reversed and spent the remainder of the session climbing off ... More
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