Stocks should be crushed by global turmoil, Jim Cramer says. Instead, they're doing fine.
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With buzz-worthy debuts from LinkedIn and Yandex, it's been a strong year for initial public offerings. But it seems like there are just as many losers as winners.
Updated: 4:40 p.m. ET
By Debra Borchardt, TheStreet
LinkedIn (LNKD) set the bar pretty high for initial public offerings with its scorching debut last month, and that kind of trading can help the wider IPO market by fueling demand for the next batch of new companies to go public.
Several prominent IPOs followed on the heels of LinkedIn's offering, and today coupon website Groupon joined the fray by filing to go public.
The vast majority of retail investors, of course, don't get to buy in at the offering price. Those allocations are doled out to institutional players and a few lucky retail brokerage clients. Even then, those brokerage clients only get tiny slivers of the sale. That leaves everyone else waiting until the stock's debut to get a piece of the action.
Following LinkedIn and the massive $10 billion offering of Glencore International on the London Stock Exchange, the total value of global IPOs reached $80.3 billion year-to-date as of May 20, according to Thomson Reuters, up 1% from 2010's pace. And that doesn't include Yandex (YNDX) and a host of other debuts that went off with varying success as the month drew to a close.
Despite a blowout quarter from the equipment maker, in this market, it's futile to pick up shares until they fall -- like it or not.
But it's amusing to think of it like this: When you go through the earnings release, there is nothing but net. Raised outlooks; positive items about coal, iron, copper and oil; demand soaring from China and India. All the right touchstones.
All of the things that would ordinarily have sent it up 10% today and then kept it up in subsequent days.
In this market, though, it doesn't matter, because we are staring at sub-3% bond yields on the 10-year Treasury, which confirms that the recession is back -- except this time neither the Fed nor Congress can come to the rescue. That is the mindset of this market, like it or not.
A package that some people thought would save the country won't fix its real economic issues.
The much-hoped-for June deal between Greece and its "saviors" -- the European Union, the International Monetary Fund (IMF), and the European Central Bank (ECB) -- looks more and more like an effort to kick the can down the road as far as possible -- and pray that things get better.
The European Central Bank is taking the lead in putting together this deal -- and it's only logical, therefore, that its concerns are driving its structure.
The bank's big worry is the extreme vulnerability of the European banking system to a Greek default. Too many banks in France and Germany hold too much Greek debt, and any restructuring would require government rescues of the most troubled of these institutions.
A Greek default, the bank worries, would also destabilize the rescues of Ireland and Portugal, requiring the bank to open new fronts in its fight to keep the euro from imploding.
The sell-off I've been warning of for months has reached new depths, but a few points of light are beginning to shine.
Stocks dropped hard Wednesday on another batch of bad economic news and a sovereign credit downgrade for Greece. The Citigroup Economic Surprise Index, which measures how growth is faring against Wall Street expectations, is in the midst of its most violent decline since the 2008 financial crisis. And with the end of the Federal Reserve's $600 billion money-printing initiative just a few weeks away, investors are running scared.
There's good reason for this. A rise in inflationary pressures has been the main reason economic data have been so terrible lately -- a situation I've covered at length in my columns and blog posts going back to February. Additional Fed stimulus would only make the problem worse, effectively shelving hopes for a third round of direct asset purchases by the central bank. A QE3 would make the problem worse.
After months of banging on the table that all was not well with the economy and the markets, I'm slowly beginning to see glimmers of hope that suggest that the broad market sell-off, which entered its third month Wednesday, could give way to a relief rebound rally. Remember that the time to get cautiously bullish is when there's blood in the streets. Right now, there's a sea of red.
A listing in China would help the beverage giant fund expansion and promote its brand.
This would be a big deal. China doesn't allow foreign companies to list in its stock market, but it wants Shanghai to become more of a financial hub. So the government has opened the door for a foreign board of international companies to list on the Shanghai stock exchange, and Coke wants in.
The plans seem fairly murky at this point. There's no official time line for when this foreign board will get started, but some people expect to see approval this summer. We don't know which companies will be allowed on the board.
Check out this interview with Coke's chief executive about China. Post continues after video:
Declining prices and a still-gloomy market outlook haven't stopped several of the sector's top stocks from rallying.
By Tom Aspray, MoneyShow.com
Tuesday’s release of the March S&P/Case-Shiller price index showed a drop of 3.6%, which was the largest year-to-year decline since November 2009. The decline in national home prices back to 2002 levels has many people discussing a double-dip recession in housing. Sentiment on housing has also gotten worse, as 54% of Americans do not think housing will bottom until 2014.
The gloomy outlook has not affected homebuilders' stocks, however, as many have surged over the past few days on strong volume. The Dow Jones Homebuilding Index completed a weekly head-and-shoulders (H&S) top formation in April 2006 when the neckline in the 800 area was broken.
This industry group eventually made a low at 162 in November 2008. Since those lows, the group has traded in a wide range, but it now appears that the correction from the early 2011 highs is over.
Some of the largest homebuilders are already near resistance, while others are much closer to good support and may provide low-risk buying opportunities.
Here are your choices for saving intelligently.
By Alex Dumortier, CFA
This month, the rate of inflation exceeded the yield on the 10-year Treasury bond for the first time since 2008. That's a negative real yield. Your assets will lose purchasing power with that return. Bill Gross, who manages the world's biggest bond fund, told Bloomberg Television last week: "Savers are being disadvantaged. . . . We call (what policymakers are trying to do) pocket picking." Don't let central bankers pick your pocket. Here are a few asset allocation guidelines to avoid just that.
Saving is healthy -- even necessary. Indeed, during the housing bubble, there was spending on a massive scale, with people borrowing against the value of their home to fund their spending habits. Now that the party is over, U.S. consumers are left licking their wounds -- or balance sheets, as it were.
Avoid cash and government bonds
However, by setting interest rates at zero, the Federal Reserve isn't making it easy for people to save -- that's the idea.
Catastrophic claims are pummeling profits, though shares of some insurers still carry 'buy' ratings.
By Frank Byrt, TheStreet
There's no shelter for those in the property-casualty insurance industry this year, as they face a tidal wave of underwriting losses stemming from a string of catastrophes of Biblical proportions, including earthquakes, Tsunamis, nuclear plant meltdowns, and tornados.
SNL Financial, which tracks insurance industry data, reported that the industry had its worst first quarter since 2001, with an estimated underwriting loss of $3.3 billion, as insurers spent nearly $1.03 on claims and expenses for every dollar they collected in premiums.
And disaster-claims payouts worldwide this year are on record pace, on order of $50 billion to $60 billion so far, said Jose Miranda, director of client advocacy at Eqecat, which provides disaster and risk modeling for insurance companies.
So you'd think insurance-industry analysts would have a bunch of screaming "sell" ratings on companies in this sector, particularly on reinsurers, who take on risk that the front line property/casualty insurers don't want.
These funds track travel, food, entertainment and social networking.
By Don Dion, TheStreet
The temperature is rising up here in the Berkshires, and for many people here and across the U.S., this means it's time to escape the day-to-day office life and enjoy some rest and relaxation.
While many folks are counting down to the time when they can replace their desk chairs with beach chairs, for others, the arrival of summer presents a number of attractive investing opportunities.
There are a number of exchange-traded funds that may prove exciting to watch over the next few months.
No longer hostage to raw costs and consumer whims, consolidated clothing companies like Phillips-Van Heusen are premier growth vehicles.
The results were spectacular, led by international -- chiefly Calvin Klein and Tommy Hilfiger. Of course, going into the quarter the betting was heavy that we would have another disappointment, like Polo Ralph Lauren (RL) after its quarter, or like VF Corp. (VFC) after a recent conference.
But the bearish reasoning was all backward. We heard that PVH would have a hard time with cotton costs for Calvin Klein. But PVH licenses the Calvin Klein name and doesn't have to eat those cotton costs. We heard that Tommy can't maintain its strength in Europe. But prices are actually rising for Tommy clothes (they already sell for more than double their cost here for pretty much the same product) in Europe and Russia.
The Brazilian government is trying to attract customers to Vale. What does that involvement mean for the company?
It spends more than it brings in, and it's on track to hit its debt limit. Why can't it pull itself out of this mess?
How is it that UPS (UPS) and FedEx (FDX) can run profitable, successful delivery services while the U.S. Postal Service blunders its way into insolvency? That's an easy question to answer after you read the BusinessWeek article.
The USPS brought in $67 billion in revenue last year, not nearly enough to cover its costs. It's nearly $15 billion in debt and will hit its debt limit this year. If this continues, the Postal Service will collapse.
Post continues after this video interview with BusinessWeek's editor about the article:
The stocks have soared over the past year, and they stand to benefit from low interest rates and more conservative investors.
There is no stopping this sector. The top stock in the group? Analysts from UBS say menthol leader Lorillard is the top pick, and they're raising their price target on the stock to $124. Lorillard is trading at about $115 today.
Lorillard has a strong growth trajectory, and is expanding its Newport line to include non-menthol cigarettes such as its recently introduced Newport Red. In the first quarter of this year, Lorillard's sales rose nearly 13%, profit rose 7% and the company raised its dividend 16%.
The chief executive, currently on medical leave, is on board to announce the company's new software offerings. With video.
Normally the company keeps its set list top secret. But on Tuesday, Apple was very clear that the event is all about software, including its new operating system, Lion. Apple will also talk about its next mobile operating system for devices like the iPad and iPhone, and finally its upcoming cloud services product, called iCloud.
And to top it all off, chief executive Steve Jobs will deliver the keynote. That wasn't expected, as Jobs went on medical leave in January. One large Apple shareholder talks about what he sees in the news in the following video.
Post continues after video:
Traders playing the short side must be sure to avoid some common pitfalls. See what they are and discover several heavily shorted stocks that seem poised to move higher.
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[BRIEFING.COM] The stock market capped the trading week with losses across the major averages. The S&P 500 fell 0.5% to surrender its weekly gain, while the Dow Jones Industrial Average (-0.7%) and Russell 2000 (-0.9%) underperformed. The two indices posted respective losses of 0.8% and 0.6% for the week.
Equity indices were pressured from the get-go after several heavyweights disappointed the market with their earnings and/or guidance, which led to some broader profit-taking. After ... More
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