Sell-off may continue, but don't panic
Sell-off may continue, but don't panic

Experts say that the recent market action feels 'more like a repositioning,' and that it won't stop anytime soon.

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The coffee king is taking a page from the Tea Party focusing on grass roots and local tastes. The strategy is working.

By Jamie Dlugosch Feb 8, 2010 6:37PM

Coffee beansThe upstart, grassroots based Tea Party hosted its first convention this past weekend. Its most notable speaker, Sarah Palin, urged the movement to stay true to its core by remaining leaderless.

 

Without a key figurehead, the movement can remain nimble and local.

 

Interestingly, certain business lessons can be learned by following the lead of the Tea Party. Specifically, Starbucks (SBUX) and its founder Howard Schultz are invoking the same advice in efforts to revive the global leader in retail coffee.

 

“We lost our way,” Schultz says in describing the difficulties of the company. In order to get back on track the company is returning to its days of entrepreneurial spirit.

 

That spirit allows Starbucks to react quickly to changing local tastes and needs. (As a result Starbucks recently beat earnings estimates. Here are 10 stocks likely to do the same)

 

Evidence suggests the economic recovery is gaining traction.

By Anthony Mirhaydari Feb 8, 2010 6:15PM

MirhaydariAlthough it probably doesn't feel like it, especially for the 8.4 million souls that have lost a job since the recession started back in 2007, the job market has started to heal. After peaking at 10.2% in October, the unemployment rate has fallen to 9.7%. Sure, some of the drop is a reflection of the large number of people that have left the work force over the last two years. And businesses still reported that payrolls fell by another 20,000 positions last month.

 

But according to Deutsche Bank economists, the unemployment rate (calculated from a survey of households) has a very strong record of predicting job market turnarounds. This is because it can capture job creation from small business startups that isn't reflected in the payroll data. And small businesses are the powerhouses of any early economic expansion.

 

There are more signs of strength. The manufacturing sector added jobs last month for the first time in three years. Temporary hiring continued to expand. Work hours increased at the fastest rate since mid-2007. So the obvious question is: Can these gains continue?

 

Are the euro's troubles and China's lending problems tied up in the same crisis? Whatever the answer, the US is still the wild card.

By Jim J. Jubak Feb 8, 2010 4:52PM

Jim JubakOne crisis or two?


How you answer that question will go a long way to determining your investment strategy right now.


If the euro crisis and the bank lending crisis in China are all part of the same crisis, you should stay out of all equity markets until the world works through this mess. (Enjoy your vacation. See you in September.)


If, however, the euro crisis and the bank lending crisis in China are coincidentally but not causally related

 

Central bank actions in India could pull the banking sector down. This may be a time to jump in.

By Jim J. Jubak Feb 8, 2010 4:21PM

Jim JubakAt the end of January the Reserve Bank of India, the country’s central bank, held a conference call for analysts and investors. 


The message: The bank is worried about continued growth in government borrowing and strong demand for loans from the commercial sector. And that the bank will move to reduce excess liquidity in the banking sector before it leads to rising expectations for higher inflation.  


Look out Indian banks, higher interest rates ahead. 


I’d be surprised if Indian bank stocks didn’t retreat

 

Controversial banking exec John Thain to lead struggling lender CIT Group. Do two wrongs make a right here?

By Kim Peterson Feb 8, 2010 2:39PM
John Thain. Credit:  (©Jonathan Fickies/Bloomberg/Getty Images)Two train wrecks of the financial world -- John Thain and CIT Group -- have joined forces. No wonder they waited until the Super Bowl started to announce this one.

John Thain became a poster boy for banker excesses as the economy went south. As the former head of Merrill Lynch, he asked for a $10 million bonus even after his company went off the rails. He spent $1.2 million in company money decorating his office with with an $87,000 rug and other indulgences.

And CIT Group? The business lender recently came out of Chapter 11 bankruptcy protection, in which it erased some $10 billion in debt -- including $2.3 billion in government aid.

Now, Thain will become CIT's chairman and chief executive. 

Investors could easily double their money in 2010 as this global battle for customers and profits takes shape.

By InvestorPlace Feb 8, 2010 2:22PM

InvestorPlaceBy Robert Hsu, InvestorPlace.com

 

Because the yuan is pegged to the dollar, Chinese outsourcing becomes cheaper as the U.S. dollar falls. It's this dollar-based competitive advantage that has provoked Indian companies to slash costs and profit margins to remain competitive, especially in the tech sector. And Chinese companies now have responded by ramping up efforts to steal more business from Indian companies.

 

If you look closely, you can actually see the battle brewing with your own eyes simply by skimming the back pages of the financial section. There you'll see Indian companies rushing to buy stakes in Chinese companies, while Chinese companies are countering the move by spending nearly $35 billion in M&A activity -- all in hopes of grabbing a bigger piece of the outsourcing pie.

 

This virtual outsourcing arms race will put powerful upward pressure on the stock prices of companies that give U.S. and European companies what they want faster, better and cheaper than the competition. 

 

Here are three companies poised to prevail in this epic battle of emerging market titans.

 

The e-book leader will likely add a color screen to its Kindle to make it the device to beat, analyst says.

By TheStreet Staff Feb 8, 2010 12:35PM
TheStreet

Amazon Kindle, Credit: (© Peter Zschunke/AP)By Scott Moritz, TheStreet

 

The Kindle's rise has lifted Amazon (AMZN) to a buy rating at Collins Stewart.

 

After a 10% slide in the stock in the past month, Collins Stewart analyst Sandeep Aggarwal upgraded the stock to buy, citing the Kindle's strength in the all-important e-book sector. Aggarwal estimates that Amazon will sell 3.85 million Kindles this year. If that turns out to be true, Amazon would have a profit of $650 million on $2.5 billion in sales.

 

The electronic reader sector is starting to heat up. Last month, Apple (AAPL) introduced its iPad tablet. Last week,  Google (GOOG) was rumored to be entering the race with a "gPad"-friendly operating system and this week, Barnes & Noble (BKS) has stocked up on its Nook e-reader devices.

 

The future of cocoa looks tasty, even in a recession.

By InvestorPlace Feb 8, 2010 11:23AM

InvestorPlacechocolate © image100/CorbisBy Paul Ausick


Is there a bull market in chocolate?

 

Yes, the same metric ton of cocoa that sold for just over $3,500 on Jan. 31 was going for $3,100 a week later.

 

But over the past 12 months, cocoa has risen 25%, according to the International Cocoa Organization -- despite that recent drop.


Companies that produce chocolate, such as Kraft Foods (KFT), Hershey (HSY), Cadbury (CBY), Rocky Mountain Chocolate Factory (RMCF) and Nestle, have also posted gains for the past year, though not as strong as the commodity itself. And of course the Kraft buyout offer for Cadbury has skewed share prices for both companies.

 

Remember, this is 2010 -- any confidence will be undermined.

By Jim Cramer Feb 8, 2010 9:11AM

 Jim Cramer

By Jim Cramer, TheStreet

 

You saw it this weekend in the papers. The next saga. The next serpentine that we will hear about endlessly from the media, courtesy the hedge funds, is that all government stimulus from now on leads to government defaults. We will be stuck hearing quotes on sovereign credit all year. It will be the next big distraction, the next big bear construct meant to take the markets down.

 

So let's trace it out so you know what will face us.

 

First, the media always says there can't just be one. Can't just be one country. Can't even just be four countries, which the media will talk about just because it is in on the joke, the joke being "PIGS" like BRICs. (PIGS is Portugal, Ireland, Greece and Spain). We know, the media tells us, it can't be contained within these regions.

 

The market is not reacting to the numbers from the economy, positive earnings or job numbers but by the hot air spewing from Washington. In this time of uncertainty maybe Robert Stovall's Super Bowl indicator is the answer.

By Jim Van Meerten Feb 7, 2010 3:03PM
I just returned from a week in Orlando at the Money Show. The speakers were terrific and I came back with a lot of good ideas that I'll share in the coming weeks. I'm not sure what happened to your portfolio but I came back to a lot of triggered stop losses. My Wall Street Survivor portfolio is down 1.97% for the month which puts me back in 6th place behind this months winner so far, Tobin Smith who has a 1.56% gain.

Most speakers at the Money Show had different opinions on the market, how to play it and what's in store for the next 6 months but one thing they all agreed on was that earnings, the economy and job numbers are not being properly factored into this market. Things are improving but every time someone in Washington opens their mouth the hot air deflates the market. Is the hot air deflating your portfolio?

Let's take a step back and see how the market did. As usual I'll use Barchart for my data.
 

Despite the market's bearish turn, most of the successful investment gurus I keep an eye on aren't turning away from equities.

By John Reese Feb 5, 2010 4:59PM

The markets continue to get rattled by a number of factors, ranging from China's recent economy-cooling measures to Europe's troubling debt picture to stubbornly high unemployment numbers in the U.S. But with sentiment dropping -- the American Association of Individual Investors' weekly survey found that less than 30% of investors are now bullish, down from 47% in mid-January -- there are plenty of opportunities to pick up solid stocks.

That's what several of the gurus I keep an eye on indicated over the past week. Most are still bullish, including top value manager Bill Nygren. Nygren, whose Oakmark fund is up more than 50% over the past year and is in the top 2% of funds in its category over the past decade, said now is not the time to fear stocks. “The thoughtful investor today, rather than thinking about how they missed the rally or remaining afraid of another lost decade, needs to get back to basics," he told Minyanville.com. “They need to think about what target equity allocation makes sense for them."

 

For most, Nygren said, "equities are still the asset class of choice. They should still have long-term returns exceeding fixed-income returns. Most investors today are still beneath their target allocations.”

 

 

Do your homework before investing in the highly popular Berkshire Hathaway B shares.

By TheStreet Staff Feb 5, 2010 4:45PM

TheStreetWarren Buffett. Credit: (© Paul White/AP)By Don Dion, TheStreet

 

Warren Buffett broke his own rules when he split Berkshire Hathaway (BRK.A) shares to pay for the acquisition of Burlington Northern Santa Fe (BNI), but the move appears to have paid off.

 

Since the 50-for-1 split on Jan. 20, Berkshire Hathaway’s B Shares (BRK.B) has been on an upward trajectory as investors pile into the firm in hopes of gaining access to the mind of the savviest investor around.

 

From the day of the split to Feb. 3, the company’s B shares have jumped more than 6%, while the S&P has dipped more than 3%. Class A Berkshire shares have gained throughout the period, jumping 7%.

 

Having recently emerged from bankruptcy, the maker of auto parts is poised to capitalize.

By Jamie Dlugosch Feb 5, 2010 3:17PM

Much has been written about Toyota’s big recall and the damage it will do to the company. The big winner as a result of this debacle is projected to be Ford, but there will be other winners, too.

 

Auto-parts-maker Lear (LEA) is poised to see sales increase as shoppers abandon Toyota in favor of Ford. This will be especially true if there is a big recall of the popular Prius hybrid.

 

A supposed brake problem may trigger the next domino to fall for Toyota.

 

Here's a look at how Treasury Secretary Timothy Geithner has dealt with the challenges he faced when his tenure began.

By TheStreet Staff Feb 5, 2010 3:14PM

TheStreetBy Lauren Tara LaCapra, TheStreet

 

Treasury Secretary Timothy Geithner was appointed to office with three goals: repair banks, fix housing, and stimulate private investment.

 

While Geithner has come under sharp criticism recently for his role in the American International Group (AIG) counterparty scandal, it's worth taking a look at what he's achieved in a remarkably short period.

 

Geithner unveiled a wide-ranging reform proposal just 15 days after he was sworn in on Jan. 26, 2009. Here's a look at how these initiatives have fared during Geithner's first year in office:

 

 

Chief executive James Keyes plans to save the video-rental chain by focusing on digital initiatives and kiosk expansion.

By TheStreet Staff Feb 5, 2010 2:03PM

TheStreetBy Jeanine Poggi, TheStreet

 

There's no denying that Blockbuster (BBI) is listing. Chief executive James Keyes, to his credit, didn't attempt to deny it during an exclusive interview with TheStreet.

 

Competition from Netflix (NFLX) and Coinstar's (CSTR) Redbox has intensified, forcing Blockbuster to rethink its strategy. The company said it lost $183 million to $193 million in fiscal 2009 and plans to close 20% of its stores by 2011.

 

TheStreet spoke with Keyes, who took the reins at Blockbuster in 2007, to see how he plans to revive the company and fend off bankruptcy.

 

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[BRIEFING.COM] The stock market finished a down week on a cautious note with small caps leading the retreat. The Russell 2000 lost 0.5%, widening its weekly decline to 2.6%, while the S&P 500 shed 0.3%. The benchmark index ended the week lower by 2.7%.

This morning, the market was provided a basis to rebound with the July employment report, which was just right for the policy doves (209K versus Briefing.com consensus 220K). It showed payroll growth that was weaker than expected, ... More


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