5 reasons the market is seeing red
5 reasons the market is seeing red

Geopolitical crises are taking a toll on stocks as we head into the seasonally weak month of August.


An executive shake-up breaks up the three-way decision team at Google, as co-founder Larry Page replaces Eric Schmidt as CEO.

By TheStreet Staff Jan 20, 2011 6:27PM

thestreetBy Scott Moritz, TheStreet


Google (GOOG) is breaking up the band.


The company says its unique and somewhat clunky executive triad will be streamlined in April. According to the plan, CEO Eric Schmidt will be replaced by Google co-founder Larry Page.


Schmidt, who was long thought of as the seasoned hand and management talent at the search giant, will take the executive chairman title.


The restructuring also includes the departure of Sergey Brin from the management team. Brin's new role will be far less central to Google's core operations and he will have the title of "co-founder."


We could see a 5% drop in U.S. stocks, but there's still a strong investing story in the U.S. this year.

By Jim J. Jubak Jan 20, 2011 5:47PM
Jim JubakI think we're looking at a pullback in U.S. stocks. A pullback in my book is about 5%. It's less than a correction, which is a drop of 10%. (Please note I'm talking about U.S. stocks only in this post.)

The reasons for this are numerous:
  • An overbought market ripe for profit-taking after a long rally.
  • Worries about a slowdown in China as it struggles to get inflation under control
  • More squabbles among Eurozone members over how to fix the continuing euro crisis
  • Good but not great earnings reports (and therefore disappointments) in the financial sector
  • A weak report on housing starts reminding investors the sector isn’t out of its slump yet.
I don’t see anything there that signals the end of the world, do you?

Analysts and investors have their expectations set to high for this industry.

By Jim Van Meerten Jan 20, 2011 3:57PM

Image: Jim Van MeertenAm I the only one who is having butterflies about the solar industry? Is there a market for this resource, or is it all just smoke and mirrors?

Using Barchart, I found 4 solar stocks that on average are up over 20% in the last month alone. The brokerages have fantastic projections and there is very high investor sentiment, but my intuition is holding me back from making a recommendation.  Here's what others think. Let me hear your opinions.


Jinko Solar (JKS)

  • Barchart Trend Spotter technical buy signal
  • 9 new highs and up 29.13% in the last month
  • Relative Strength Index 64.33% and rising
  • Trades around 28.16 with a 50 day moving average of 24.63
  • Wall Street brokerages have 4 buy, 1 hold and 2 under perform recommendations
  • Revenue projected to increase 177.40% this year and 43.10% next year
  • EPS estimated to increase 1,302.30 this year and increase annually 15.00% for at least 5 years
  • Motley Fool CAPS members vote 75 to 22 and All Stars vote 14 to 8 that the stock will beat the market

Wendy's/Arby's Group says that focusing on Wendy's is a better bet. Will Arby's find any bidders?

By Kim Peterson Jan 20, 2011 3:56PM
Credit: Arby’s (© Reuters)If you have piles of cash and want to buy a beloved but struggling fast-food chain, this is your week. First, Long John Silver's and A&W went up for sale. Now we're learning that Arby's might be available as well.

Wendy's/Arby's Group (WEN) plans to put the Arby's chain up for sale, The Wall Street Journal reported. Arby's doesn't have the two things it takes to succeed as a fast-food chain these days: The ability to expand overseas or steal business from the competition.

The company now wants to focus entirely on Wendy's. "The reality is that the Wendy's brand, given its relative size and scope, is the key driver of shareholder return," said Wendy's/Arby's chairman Nelson Peltz in a statement to the Journal.

Shares of the company soared Thursday on the news, rising by more than 8% to $4.85. 

The pros are professing newfound love for these funds, but you should tune them out.

By TheStreet Staff Jan 20, 2011 2:35PM

Image: Financial (© Corbis)By Gary Gordon, TheStreet


Goldman Sachs (GS) reported weak revenue, Citigroup (C) missed profit forecasts and Wells Fargo (WFC) merely matched estimates. In truth, JPMorgan Chase (JPM) is the only major financial institution that has reported inspirational numbers, but even "J.P." has problems in its mortgage division.


Herein lies an ongoing dilemma. You can improve your balance sheet by offloading troubled assets and/or writing off low-quality loans. You can ensure a measure of profitability by limiting your employee overhead, maintaining double-digit credit card rates, having some success in trading volume and/or offering next-to-zero savings rates to depositors. Yet financial stocks will still see "fits" without a more potent level of lending to small businesses and individuals.


Lately, many readers have been devouring rapturous reports on the incredible prospects for the financial sector. Hypothetically, economic expansion should encourage greater demand on the part of consumers and businesses alike.


The company makes it harder to add to the DVD queue from streaming devices, igniting a firestorm of controversy.

By Kim Peterson Jan 20, 2011 1:59PM
Credit: (© Paul Sakuma/AP)
Caption: Netflix DVDIs Netflix (NFLX) trying to phase out the DVD? That's what some customers are saying after the company sent out a short message this week on the company blog.

Netflix is removing the "Add to DVD queue" option for people who use Xbox 360s and other devices that stream Netflix videos. Those users must now go directly to Netflix's website to add movies to the DVD queue (you can still add to the "instant" queue from anywhere).

Talk about inconvenient. The move has ignited a firestorm of resentment among users, and the blog post has received 4,500 mostly negative comments. Why would Netflix do this? The explanation is, well, a little bit murky.

"We're doing this so we can concentrate on offering you the titles that are available to watch instantly," the company says on its blog. 

With world markets recovering and developing, the prospects for the power industry appear promising.

By TheStreet Staff Jan 20, 2011 12:56PM

Image: Globe (© Comstock/SuperStock)By Don Dion, TheStreet


Rising commodity prices have been the talk of the Street for weeks, leading investors to seek out new and promising ways to gain access to wheat, coal, copper and other hard assets.


Energy, in particular, has gained a great deal of investor interest as improving economic conditions around the globe help lift crude prices back toward $100. This week, looking ahead to the new year, the International Energy Agency offered a promising outlook, raising its 2011 global oil demand forecast.


Targeting oil and other facets of the energy sector has become a simple endeavor, thanks to the advent of exchange-traded funds. Using products such as the United States Oil Fund (USO) or the iShares Dow Jones U.S. Oil Equipment & Services Index Fund (IEZ), investors can directly capture the price action of this fuel source through futures contracts, or take an indirect approach to the industry and play the effect of rising prices on producers.


With Steve Jobs on medical leave, all eyes are on his No. 2.

By TheStreet Staff Jan 20, 2011 12:54PM

Credit: Apple Chief Operating Officer Tim Cook ((C) Chris Hondros/Getty Images)By James Rogers, TheStreet


Investors listening to Apple's (AAPL)first-quarter conference call Tuesday hoping for some Steve Jobs-style showboating and fiery rhetoric were surely disappointed. A soft-spoken, somewhat reserved Southerner is now center stage at the world's biggest technology company.


With Jobs on medical leave, all eyes are now focused on his No. 2, COO Tim Cook. Whereas his flamboyant boss spiced up press events and analyst calls with the occasional dig at fellow Silicon Valley companies like Adobe (ADBE), Cook's conference call comments (save for one swipe at rival tablet makers) were much more restrained. The Alabama native instead made vague references to the "magic of Apple" while giving little away about the company's broader strategy and its succession plan.


Cook, of course, is familiar with this role. He has already taken the company's reins on two prior occasions: for two months in 2004 when Jobs was receiving treatment for pancreatic cancer, and again for six months in 2009.


Take advantage of the market's messed-up expectation on the maker of the Cessna business jet.

By Motley Fool Pick of the Day Jan 20, 2011 12:40PM

The recession hit capital equipment makers hard because many customers had to forestall upgrades in order to survive. But the market seems to be ignoring the fact this can't continue forever, and all that cash sitting around has to be put to use sometime soon.


Rex Moore, Motley Fool Top Stocks editor


With a record amount of cash now sitting on company balance sheets, management teams are beginning to feel comfortable enough with the economic recovery to start loosening the purse strings. One company that stands to gain heavily from this is Textron (TXT).


The retailer plans to offer cheaper, better eats. But past efforts to boost product quality and lower prices didn't help sales.

By InvestorPlace Jan 20, 2011 10:48AM

Image: Groceries (© Tetra Images/Corbis)By Jeff Reeves, editor of InvestorPlace.com


Wal-Mart Stores Inc. (WMT) is looking to prove you can be a big-box retailer and still believe in smaller waistlines. And to help achieve that goal, it's asking the first lady for help.


The company announced a plan today that will give shoppers healthier food options at lower prices, cutting out some of the most unhealthful foods packaged under its store brands. Coupled with better food on the shelf is a better PR push for the company's healthful offerings -- led by a partnership with Michelle Obama, who will attend the official Wal-Mart announcement, according to reports.


The in-store plan involves taking unhealthful salts, saturated fats, transfats and sugar out of Wal-Mart store-branded products under the Great Value and Sam's Choice labels. The retailer also has pledged to lower prices on fruits and vegetables.


Internet stocks are down 5% to 10% after F5 Networks' disappointing earnings. It's a chance to pick up the names you thought had gotten away from you.

By Jim Cramer Jan 20, 2011 9:59AM

jim cramerShoot first. Shoot everything! That's the market's reaction to Internet backbone F5 Networks' (FFIV) earnings last night, and I have to tell you that I believe it is a vicious overreaction. But don't tell the sellers.


I am seeing anything connected to the Net down 5% to 10%. Anything. Juniper (JNPR). Salesforce.com (CRM). Riverbed (RVBD). Acme Packet (APKT). Motricity (MOTR). Akamai (AKAM) is the only one that seems not to be down too far . . . yet. The whole mobile Internet tsunami has been wiped out because of F5's guidance!


What's the truth here?


First, if you can get F5 down even 30 -- who would ever have thought that would merit an "even"? -- then you should just grab it.

That's ridiculous. The company is a good company. While you can't be overly eager, because we don't know enough yet about what "went wrong" at F5, it doesn't deserve to be drawn and quartered (or thirded)!


The cement-maker almost went under in the credit crisis. But economic growth in the US and Mexico is helping it recover.

By Jim J. Jubak Jan 19, 2011 5:10PM
Image: Jim JubakA cement-maker like Cemex (CX) couldn't have picked a worse set of markets for the global economic crisis if it had tried.

The company's third- and fourth-largest markets? Spain and the United Kingdom. The second? The United States, epicenter for the global housing meltdown. And then, of course, there is No. 1: Mexico, where domestic economic activity closely follows growth (or the lack thereof) in the United States.

No wonder Cemex almost went under during the crisis, drowning in an ocean of debt that included $14 billion for its 2007 top-of-the-market acquisition of Rinker, an Australian cement-maker with even bigger exposure to the U.S. market. The stock, which had looked like it was closing in on $30 a share in May 2008, bottomed below $4 in November 2008.

Yes, Chinese airlines have ordered 200 aircraft from Boeing. But we already knew that.

By Kim Peterson Jan 19, 2011 3:48PM
Image: Airline (© Christie & Cole/Corbis)Boeing (BA) has a huge order in from China worth $19 billion, the White House announced today. The order of 200 aircraft will be delivered over three years.

But shareholders didn't react to the news, and Boeing shares actually fell by 1%. That's because there actually aren't any new orders to announce.

All those planes have already been announced in the past four years, The Seattle Times reports. Boeing has already received nonrefundable deposits on them and booked them as firm orders.

So the impact on Boeing is minimal. The only newsworthy thing to come out of today is that the Chinese government gave final approval to the airlines that placed those plane orders. 

Who owns the rights to the popular dolls? Two toy companies are fighting it out.

By Kim Peterson Jan 19, 2011 3:06PM
Credit: Bratz Dolls (©Gregory Bull/AP)The Bratz dolls line has been a huge success for MGA Entertainment. And Barbie, well, let's just say she's no longer the most popular girl in the toy store.

All of this has ruffled feathers within the toy industry, spurring an ugly legal battle between MGA and Barbie maker Mattel (MAT). How ugly is it?

Mattel executives described a "rival-led Barbie genocide" in one internal memo, according to The Associated Press. "This is war and sides must be taken: Barbie stands for good. All others stand for evil," the memo read. Yikes.

The memo emerged in an ongoing court fight that entered its second round this week. At the heart of the case is Mattel's claim that Bratz creator Carter Bryant came up with the idea for the dolls while he was working at Mattel. Mattel also says MGA secretly conspired with Bryant to steal the idea. 

Believe it or not, the company has strengths that investors are missing.

By Motley Fool Pick of the Day Jan 19, 2011 2:57PM

Credit: (© Paul Sakuma/AP)
Caption: Apple CEO Steve JobsFour months ago, Eric Bleeker recommended Apple. After a nice 25% run-up, he's not shying away from the stock and thinks the $300 billion behemoth still has plenty of room to run.


Rex Moore, Motley Fool Top Stocks editor


The $300 billion market capitalization might scare investors off, but I think Apple (AAPL) has plenty of room to grow. In fact, it's my top conviction selection to outperform the market in 2011. I don't think you'll see another year of 53% returns like Apple had in 2010, but at today's price levels, there's still a lot left in the tank.


Why Apple has room to run
There are four key themes that should keep Apple outperforming.

  1. iOS scales. Apple has proven its ability to scale iOS to different devices, which unlocks opportunities in connected living room devices (think Apple TV) as well as advertising.  
  2. Software is the new kingmaker. Unlike the age of Motorola's (MMI) RAZR when phones were differentiated by slick designs that were easy to copy, phone dominance is now dictated by the software. That's a much more defensible position, especially when Apple controls its App Store and the media platform (iTunes) its users have adopted.


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Market index data delayed by 15 minutes

[BRIEFING.COM] The S&P 500 trades higher by 0.2%.

The University of Michigan Consumer Sentiment report for July was revised up to 81.8 from 81.3 in the final reading, while the Briefing.com consensus expected the reading to be revised up to 82.0.

Separately, June construction spending decreased 1.8% month-over-month, while the Briefing.com consensus expected an increase of 0.3%.

Also of note, the ISM Index for July rose to 57.1 from 55.3, while the Briefing.com ... More


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