Geopolitical crises are taking a toll on stocks as we head into the seasonally weak month of August.
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Traders can be a little more aggressive as we approach what should be another strong earnings season.
Stocks continued to rally last week. Investors are in a buying mood despite significant headwinds and valuations that are at the high end of historical norms.
Instead the focus is on the feel-good growth of the economy, supported by last week's strong employment number. The unemployment rate is dipping, and that is good for stocks irrespective of valuations.
The moves of the past two weeks indicate that the market has turned a corner. With earnings season about to fire up, investors can expect more gains over the next few weeks.
I’m not entirely convinced, given where valuations stand, but it is never wise to fight the tape. This week I’ll ride the tape. My ETF of choice this week is the IShares North American Technology-Multimedia Networking (IGN).
The charts show too many stocks in too many sectors looking ready to break out. Almost every time that has happened, there's been something lurking that turns things around.
Sometimes too many charts look too good for the market's health. Sometimes you just get a feeling that everything looks like a breakout and there's no way anything can go wrong.
That's how I feel going into the week after looking through the chart book. There are just too many stocks, too many kinds of stocks -- oil, minerals, telecom, health care (excluding pharma), high-growth tech, and even a lot of banks -- for my comfort.
Many times I have sat here before the market opened on a Monday thinking that it looks like the monster breakout week, when in reality we'd been rallying for some time. You look, for example, at the fetching charts of Noble Energy (NBL), Nabors (NBR), National Oilwell Varco (NOV) or of Bard (BCR), Cerner (CERN), Laboratory Corp. of America (LH) and DaVita (DVA) and say, "These are total breakouts about to happen" -- and then it turns out that was as good as it got.
They've lagged the market during the bull run, but now some see bargains among telecom stocks. With video on recent telecom-sector deal activity.
The telecom sector got a big shakeup last week, with AT&T announcing that it will buy T-Mobile in a deal that would boost AT&T's subscribership to almost 130 million -- pushing it past Verizon as the U.S.'s largest wireless carrier. The $39 billion deal is far from complete, however. It still has to make it through regulatory agencies -- and, given the antitrust implications of a deal between two of the four-largest cellular service providers in the country, the deal is likely to face quite a bit of scrutiny.
The AT&T/T-Mobile deal shined a light on a sector that has languished in recent years. Since the March 2009 low, the S&P 500 is up about 95%; the SPDR S&P International Telecom Sector exchange-traded fund, meanwhile, has made less than two-thirds of that gain, as investors have looked for flashier growth-oriented shares amid the market rebound.
Jeffrey Immelt says the rate was unusually low in 2010 but will rise this year. With video updates.
The claim has turned unwelcome attention to GE's chief executive, Jeffrey Immelt. Former Democratic Sen. Russ Feingold says Immelt should step down from President Barack Obama's new council on jobs and competitiveness. Liberal groups have started a campaign to get Immelt to resign or be removed, but the White House says it's standing by him. (Jon Stewart poked fun at the company here.)
Now Immelt is weighing in. Speaking to the Economic Club of Washington, he said GE's taxes were unusually low in the past two years because of losses its financial arm, GE Capital, incurred during the financial crisis of 2008. GE's tax rate will be much higher for 2011, he added.
Post continues after this video of Immelt's speech:
Left for dead by investors since last summer, equities of counties like China, Brazil and India are seeing a powerful new uptrend.
It's no secret that the financial system is awash in cheap cash. Years of extraordinary monetary policy from the Federal Reserve, the Bank of Japan and the European Central Bank have armed investors with plenty of firepower. So we've seen something akin to a global game of hot potato over the past year in which investors have moved en masse from one market to another in search of profits.
Last summer, traders wanted foreign issues as the dollar weakened after the Greek bailout. American stocks were shunned, while European and emerging-market issues soared. Then, as the dollar stabilized last fall and U.S. economic growth re-accelerated, asset flows reversed and everyone piled into American assets. European and emerging-market issues moved lower as Ireland and now Portugal suffered sovereign debt contagion while China had to hike interest rates to fight inflation.
Now things are reversing again. But with Europe still in trouble, emerging-market stocks are receiving all the benefit and have demonstrated huge performance since the Japa-Libya market sell-off two weeks ago. Since March 16, the iShares Emerging Markets (EEM) has gained nearly 11%, almost twice the performance of U.S. stocks. I first highlighted the trend in a blog post last week, and I think there is a lot of upside still to come.
The online retail giant reportedly plans to join the smartphone e-wallet trend.
By Scott Moritz, TheStreet
The online retailing giant plans an in-store payment approach using mobile phones and near-field communication (NFC) readers linked to cash registers to offer users the option to purchase products through their Amazon accounts, according to Bloomberg. Amazon was not immediately available for comment.
The move, if it comes to pass, would put Amazon in direct competition with Google's (GOOG) NFC-based payment plans reported earlier this week. Amazon would also be vying against big telcos AT&T (T) and Verizon (VZ), which are both working on a wireless phone payment system called Isis.
Taco Bell's meat questions, Goldman Sachs' redemption and Kenneth Cole's poor twitter choices were some of the dumbest stories on Wall Street during the first quarter.
Here are what we considered the top foolish stories from the first three months of the year.
5. Taco Bell's mystery meat
According to a suit filed by law firm Beasley Allen, what Taco Bell is advertising as beef is more of a beef filling, with heavy emphasis on the filling. In fact, the suit alleges there is so little actual beef in the filling that Taco Bell shouldn't even be allowed to call it beef. Read more
Even with their decaying land-line businesses, the telecom rivals could see cash flow explode by becoming a benign duopoly.
Verizon (VZ) and AT&T (T) paid you to wait after all. These two old-line companies and vicious competitors have gained 41% and 26%, respectively, this year and are instrumental in the big run we've had in the Dow Jones Industrial Average ($INDU).
I have always liked these stocks as good dividend payers, but I have also felt that these companies could be growth stocks if they could stabilize their land-line businesses, because their wireless businesses are growing like mad.
What I didn't count on is that even with continued weakness in their land-line businesses, they would take the giant step toward profitability by becoming a benign duopoly.
I never thought there could be an end to the price cutting and the subsidizing of hardware, or the notion that they are just common carriers in a vicious price war.
A RadioShack store owner in Montana is sticking with a controversial promotion to give away a gun with a Dish Network signup.
And it's that story that has Steve Strand in hot water with RadioShack (RSH). Strand owns a RadioShack franchise in Hamilton, Mont., and since October he's been offering a promotion that has drawn worldwide attention: Sign up for a two-year Dish Network package, get a gun.
After signing the Dish contract, customers get a coupon for a Hi Point 380 pistol or a 20-gauge shotgun, both of which sell for between $130 and $140, at a nearby gun shop, Bloomberg reports. In Montana, you don't need a license to buy a gun, but you still have to pass a background check.
According to Strand, this is a very Montana-ish thing to do. "Lot of times in Montana, grandma is packing a gun," he told The New York Daily News. "We don't think twice about it."
A Morgan Stanley analyst thinks electric cars could total 15% of all autos sold by 2025. Tesla will benefit from that, he adds. With video updates.
The analyst, Adam Jonas of Morgan Stanley, said he thinks electric cars could total 5.5% of worldwide car sales by 2020. Five years after that, electric cars could amount to 15% of cars sold, he added.
It could take Tesla a decade or more to go from a California startup to a global auto player, Jonas added, according to Bloomberg. But the company has a "viable opportunity to be a significant volume player" in the industry.
Post continues after this video analyzing Tesla's recent quarterly report:
As Japan recovers from catastrophe, this company is ready to help.
By Michael Olsen
It's easy to make blithe, hard-to-quantify, optimistic statements about buying into Japanese stocks, but I believe the reality's a lot more nuanced. The country already occupied a precarious economic perch, beset by spendthrift consumers, whopping debt, and a declining population. Add a massive natural disaster, and the government spending needed to rebuild from it, and "buy Japan" stops looking like a straightforward slam dunk.
I'd rather a wide-moated business with no direct exposure to the catastrophe, but a clear path to benefit from Japan's recovery. I found all these qualities in Aon (AON), one of the world's premier providers of insurance broking, outsourced HR services, and HR consulting. The stock is currently sandbagged by cyclically depressed earnings, seven years of declines in insurance rates, and misunderstood earnings power -- and the market doesn't seem to be pricing in any of its considerable potential. That's why I'm buying $800 worth of Aon shares for my Rising Stars portfolio.
Hershey says it will raise prices by nearly 10% to offset rising costs. Will the rest of the industry follow? With video updates.
Hershey (HSY) said this week it's going to raise prices by 9.7%, a move that many people expect competitors to follow. The entire industry is facing huge price increases for raw ingredients -- the cost of sugar has more than doubled in the past year -- and can no longer absorb the higher expenses.
In addition to its signature chocolate bar, Hershey makes Reese's Peanut Butter Cups, Twizzlers, Kit Kat and Hershey Kisses. It's not just the cost of ingredients that are rising. Hershey also said it's paying more now for fuel, utilities and transportation. Shares of Hershey were up less than 1% Thursday to $54.72.
Home centers are stocking grills, topsoil and patio furniture, but weak consumer confidence and a faltering housing market may rain on their plans.
By Jason Notte, TheStreet
Home centers such as Home Depot (HD) and Lowe's (LOW) love helping out cooped-up gardeners with cabin fever at this time of year, but spring optimism and consumer confidence are in short supply this season.
The disconnect between home centers' blueprints for the year and their consumers' expectations are creating a murkier forecast than that predicted last spring. At the time, Lowe's had designs on 4% to 6% sales growth behind a 27% spike in March new-home sales.
Home Depot, meanwhile, predicted 2.5% sales growth, and Harvard University's Joint Center For Housing Studies suggested that the amount spent on home improvements could surpass $121.5 billion by the fourth quarter of last year.
These funds focus on Germany and Switzerland.
By Don Dion, TheStreet
Europe continues to be volatile as vulnerable members of the European Union struggle to combat looming debt issues.
Interestingly, despite the economic turmoil, there are still pockets of strength in the region. By approaching them cautiously and picking the strongest players, risk-tolerant ETF investors can find promise.
At the same time the media has remained steadily focused on the troubling debt crises of Portugal and Spain, Germany has become a beacon of relative stability.
David Sokol, heir apparent at Berkshire Hathaway, resigns after buying stock in a Berkshire acquisition target. If it were any company but Warren Buffett's, an investigation would follow.
Call me confused. Confused about how Berkshire Hathaway (BRK.A) works. Confused about what it might be like to work there. I had this vision -- I am sure you did, too -- of portfolio managers in monk outfits, hairsuits even, working quietly for the master, putting in the time with the icon, learning, learning, learning. An abbey of apprentice-saints waiting for anointment.
Now I am thinking: What the heck? They are trading ahead of deals, trading for their personal accounts, darting in and out of potential targets when it is known that the saint is about to pounce and talks about it to everyone in the world?
Consider, after all, that if this is the behavior of the heir apparent David Sokol, who the heck knows what's going on there? What are the little, less-scrutinized and less-hyped individuals doing? Anything they want, on an honor system? Cool!
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[BRIEFING.COM] The stock market punctuated July with a broad-based retreat that sent the S&P 500 lower by 2.0% with all ten sectors ending in the red. The benchmark index posted a monthly decline of 1.5%, while the Russell 2000 (-2.3%) underperformed to end the month lower by 6.1%.
To get a better feel for what led to today's retreat, we'd like to look back to Wednesday, when the market had ample reason to rally, but did not. Instead, it ended basically flat after a sloppy day of ... More
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