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 won't be selling out of US financial stocks to buy up European offerings.
By Jim Cramer, TheStreet
We all know why the stress tests performed on Europe's banks didn't "count." They didn't count, because there is no way the banks in Europe aren't "as bad as" or worse than many of the banks that raised a boatload of equity in the United States.
Is Banco Santander (STD) "better" than JPMorgan (JPM)? Is Banco Bilbao (BBVA) in better shape than BB&T (BBT)? Do we think the big regional banks in the United States weren't better capitalized before raising funds than most of the German or Spanish banks?
It is true that our banks' stocks have had a hard time getting out of the way since they raised the capital, but a lot of that might have to do with the endless series of changes from Washington involving interchange fees, credit card rules and, of course, financial regulation. Anyone listening on any bank call knows that the earnings power of American banks has been severely crimped by the Congress -- at just the time we want banks to be lending.
These stocks maintain payouts despite the market's hard times.
Financial stocks have been in focus after earnings from heavyweights Goldman Sachs (GS), JP Morgan Chase (JPM), Bank of America (BAC) and others. Earnings at these top banks have apparently taken a hit as profits from their trading divisions have lagged.
But investors shouldn’t have to count on the investment arm of a big bank to make money. There are a number of high-yield dividend stocks in the financial sector that offer plenty of payback no matter what the market does.
These are financial stocks with big dividends that have managed to maintain high yields even as other financials have cut or eliminated their payouts in the wake of the financial crisis.
Last week's action was good, but can we call it a rally?
Value Line Index -- Contains 1700 stocks so it's more representative of the market than the narrow S&P 500 or very narrow Dow 30 -- Marked improvement this week but still not a full blown trend
- Index up 5.77% for the week but only up about 1.83% for the last month
- Barchart technical indicators have 6 out of 13 indicators signaling a buy for a 16% overall buy signal
- Barchart Trend Spotter (tm) is still on hold
- Index closed Friday above its 20 and 50 day moving average but is still below its 100 day moving average
- Index closed on Friday at 2400.25 slightly above its 50 day moving average of 2347.37
Big, financially sound companies have been shunned by investors for a while now, making for some exceptional bargains.
Not the sexiest picks to begin with, large, high-quality U.S. stocks are also now coming off a lengthy period of underperformance. That combination of boring and underperforming has led many investors shun the big blue chips in favor of smaller, riskier picks -- and some of the market's top strategists are saying that's created a remarkable buying opportunity.
Take, for example, Jeremy Grantham, GMO's value investing guru. In his latest quarterly letter, released this week, Grantham writes that high-quality blue chips were left behind in the junk rally of 2009 -- and they've continued to underperform this year, as the market has run into problems. "Unlike small caps [which have outperformed in the past couple years], they have been cheap for almost five years and, given the uncertainties around today, this is unusual," Grantham says. He offers some interesting theories on why this is the case, theories that include low interest rates, an aging population, and a push for far more diversification in investor portfolios over the past decade.
Whatever the reasons, Grantham says the shunning of high-quality blue chips means they're big-time bargains. GMO is forecasting that high-quality stocks (which he has defined as firms with high, stable return and low debt) will return 7.3% per year over the next seven years; it sees small-caps gaining a mere 1.1% per year over the same period.
The consequences of what is transpiring in China and Japan are, for the most part, predictable.
I have not written articles in a few months, except for the one I wrote for the July issue of Institutional Investor magazine, on Japan (I’ll post a link once the magazine comes out). I am sure Freud, after spending a few minutes in my subconscious, would provide some disturbing explanations. But as Freud said, sometimes a cigar is just a cigar. I’ve just been enjoying summer with my family.
My 9-year-old son Jonah and I have been playing chess a few hours a day. I never thought I’d enjoy playing chess as much, but I do. In fact, over the past year I’ve probably played more chess than in my whole life. I win every game! When I win, I win. When I lose I win – seeing your son (your student) beat you gives you an enormous satisfaction as a teacher. In fact, I never thought I’d enjoy losing so much. Jonah has this quality that I need to nurture in him – he never gives up. Even a game that is a clear loser for him, he plays till the end. What a great quality to have in life!
Relativity will absorb two-thirds of the staff of the floundering film company, plus execs Adee and Davies
An individual with knowledge of the deal told TheWrap that Relativity paid $10 million to take over the two major arms of the business.
Overture had sought about $100 million for the entire company.
As part of the deal, some 45 staff members, or two-thirds of Overture’s employees, will make the move to Relativity.
Amazon, Apple and Atheros all deserve a closer look after posting their second-quarter numbers.
By Hilary Kramer, editor of GameChangers
We are now in the most interesting time of each quarter for stocks and the market: earnings season: Sure, earnings are always important, but this one is about as significant as it can get, because the U.S. economy and stock market are at such a crossroads.
In our modern world, technology is now one of the most closely watched sectors in every earnings season because it is central to our economy.
Here are three tech GameChangers reporting this week that deserve a close look.
The cutback in summer internships at professional firms might predict a poor job market for the next few years
One firm cut back from 99 to 36 positions and another cut back to 21 from 81 positions. A survey showed even medium sized firms reduced from 15 positions several years ago to 7 this year.
What can we predict from this?
The hot Apple tablet debuts in Hong Kong and Singapore today to long lines and backorders. Plus: Apple delays its release of the white iPhone 4.
Long lines around the block at electronics vendors, techies drooling as they wait for their iPads, late-comers joining waiting lists as stores sell out of the gadget in minutes -- it's a familiar scene for people who have watched the previous product launches of Apple Inc. (AAPL).
Only this time, the frenzy is in Asia.
Much of the $34 billion awarded to jobless Americans will find its way to merchants' bottom lines.
By Jim Cramer, TheStreet
Looks like 2.5 million people just got $34 billion more than they had to go spend money at Macy's (M) or Home Depot (HD) and go buy VF Corp. (VFC) jeans and Stanley Black & Decker (SWK) hammers. That's how you have to view this unemployment legislation, as a gift to the retailers.
It comes at an interesting time. My contacts in retail indicate that June, unlike April or May, was a decent month and that it got better as it went along. The possibility of better numbers from outfits like Macy's or Williams-Sonoma (WSM) or Kohl's (KSS) should not be overlooked.
Of course, we have to consider the idea of just going with Wal-Mart (WMT) and Dollar General (DG) and to a lesser extent Family Dollar (FDO) as ways to play it. I always shudder at Wal-Mart because I know the president and labor organizer in chief wants it unionized through easy Card Check recruiting. But the idea of doing a high/low Williams-Sonoma/Dollar General trade may be the single best way to play the benefits bonanza and the better consumer feel (Williams-Sonoma will not get a dime of the unemployment benefits, believe me).
Equities just can't seem to find direction. The problem is risk aversion.
The past three days epitomize the churning, volatile environment of the past three months. Tuesday, of course, featured a dramatic outside day reversal to the upside. Wednesday featured an opening trade gap higher before Federal Reserve Chairman Ben Bernanke's testimony scattered the bulls. And Thursday, positive economic news out of Europe and solid earnings reports sent stocks skyward. Down, then up; up, then down. It's enough to make you dizzy.
As soon as a trend appears to be getting established, momentum is wiped out and stocks reverse direction. While it's been great for the most nimble day traders sweating over five-minute bars, it's frustrating for everyone else. Stepping back from the daily cut and thrust, one realizes that stocks haven't actually gone anywhere since last September.
Merchants, specifically those in the teen market, continue to cut prices ahead of the back-to-school rush.
By Jeanine Poggi, TheStreet
Retail is becoming one big, perpetual sale -- good news for back-to-school shoppers, but worrisome for investors.
Indeed, banking on the return of the consumer, many retailers began restocking depleted inventory months ago. But the rebound in consumer spending has been brief, and as shoppers re-tighten their wallets, retailers have marked down goods to make sales.
As a result, teen retailers saw a 4.4% decline in average retail prices to $25.21, according to a study conducted by Brean Murray -- which represents a 24% drop since prices peaked in November 2009 at $33.14.
Mutual fund manager Matt Fahey advises investors to stop running from retail and to embrace an oil driller for the second half of 2010.
By Gregg Greenberg, TheStreet
Medium-sized companies such as Mattel (MAT), Noble Corp. (NE), Western Union (WU) and Limited Brands (IDTI) will be second-half stars if the economy continues to grow, says Matt Fahey, manager of the Marshall Mid-Cap Value Fund (MVEAX).
The $236 million mutual fund is little changed this year and has risen 23% over the past 12 months.
Fahey joins TheStreet's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.
NFLX will offer streaming in Canada this fall, and Bloomberg reports digital plans are afoot at Redbox.
Soon Netflix (NFLX) will take its booming business to Canada. And if the move is successful, the DVD rental company's stock price could head farther north as well.
But Netflix is not alone in its quest to dominate the home video market. According to Bloomberg, privately held Redbox -- the company with $1 video rental vending machines -- is likely to get in on the digital movie action with its own Web-based service.
Stocks are surging today after high-frequency traders exacerbated yesterday's selloff on Bernanke's statements.
By Jim Cramer, TheStreet
Oh, goody, we can have a do-over. Looks like we are right back to where we were before Federal Reserve Chairman Ben Bernanke started talking. In fact, we are better!
The macro, it appears, isn't taking its cue from the macro!
Doesn't it seem like that? Think about it. The market has turned up this morning because commodity prices are stronger. But they are supposed to be weaker if Bernanke was on target, right?
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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[BRIEFING.COM] The early advance for the market ran into some technical resistance with the S&P 500 pushing the 1871 level. Now, the major indices are mixed as a wave of selling interest has flattened everything out in what has been termed a sloppy session so far.
Notably, we are seeing some relative strength in the defensive-oriented utilities (+0.4%), telecom services (+0.3%), and health care (+0.2%) sectors. Conversely, the influential financial sector (-0.1%) is ... More
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