3SOF

S&P, Moody's U.S. downgrade irrelevant
S&P, Moody's Irrelevant on Treasurys

Wednesday, July 27, 2011

What ratings firms say about Treasurys matters less than many suppose.

To hear politicians, the fate of modern finance is now being decided by perhaps a dozen Manhattan bond geeks. Their job at Standard & Poor's and Moody's is to paste letter grades on governments so bond buyers can decide which are good for the money. Even America's president fears them. "A six-month extension of the debt ceiling might not be enough to avoid a credit downgrade," he warned the nation in an address Monday night, having already listed some of the consequences: "Interest rates would skyrocket on credit cards, on mortgages and on car loans."

Given that Treasury bonds have historically served as a benchmark against which the safety of other investments is judged, the spillover effects would be "extremely damaging" for the world economy, a senior advisor for the International Monetary Fund said this week.

Someone forgot to tell the investors who stake actual money in Treasury bonds, however. The closely watched 10-year Treasury has gained since the beginning of the year, dropping its yield from 3.4% to 3.0%. That means interest rates on the things the president mentioned aren't expected to "skyrocket" soon—not even if the rocket he had in mind is only one of those backyard balsa-wood-and-gunpowder fliers.

Maybe financial markets are waiting for the actual downgrades. But that would contradict an investment law as basic as gravity: Markets are forward-looking. At any given moment, they anticipate information that's known or even suspected. S&P announced a negative outlook on the U.S. (warning of a possible downgrade) in April, and Moody's announced something similar earlier this month. By now, anything that would have happened has happened.

It's not that investors doubt the judgment of raters, although the latter have attracted plenty of jeers in recent years, partly because their pay-me-to-rate-you business models are inherently awkward, and partly because they have missed some colossal collapses. Enron had an investment-grade credit rating four days before it went bankrupt. During the recent housing bust, mortgage securities that were sold as Parmigiano-Reggiano turned out to be a notch below Cheez Whiz. That has led some outside analysts to mutiny. In December, Meredith Whitney, who made her name covering banks, told CBS's "60 Minutes" that 50 to 100 "sizeable" municipalities could default on amounts totaling "hundreds of billions of dollars," directly contradicting the ratings agencies, who expect that municipal defaults will be isolated and manageable.

So far, the ratings agencies have been right on municipalities. I suspect that they've taken recent criticism to heart and are working hard to produce good research. And in fairness, creditworthiness is a complicated thing to judge, depending as it does on human behavior, and the agencies get plenty of calls right. If they say the U.S. is bucking for a downgrade, I'll take their word for it. I'm unfashionably bullish on America, but I'm not sure anything deserves a perfect credit rating, least of all something that can make its own money.

But I also think the opinions of S&P and Moody's (and Fitch, which says it will decide its opinion of the U.S. in August) are irrelevant when it comes to Treasurys. These firms add value by tracking a universe of bond issuers too vast for most investors to watch. Their opinions on Ford Motor or the city of Rochester, N.Y., matter greatly to bond buyers.

The world doesn't need help analyzing Treasurys, though. No entity in the world is more closely watched than the United States government, not even Lady Gaga. And none publishes more and better information on its financial condition. The sort of investors who decide Treasury prices—foreign governments, giant mutual funds, the Social Security Trust Fund—don't wait for S&P or Moody's to tell them whether to buy. They do the math themselves.

They also have limited choices. In a recent report for Wells Fargo Securities, economist Jay Bryson writes that investors aren't likely to dump Treasurys, simply because Europe has no unified debt security and most Asian capital markets are small and illiquid, save for that of Japan, which is in worse shape than the U.S. What about the fear that large investment funds, bound by prospectus to buy only AAA-rated bonds, would be forced to sell? Bryson calls this "overblown" for two reasons. Mutual funds hold just 7% of Treasurys. Also, Bryson's team reviewed prospectuses for the largest ones and found no such mandate.

So fear the debt and the deficit a little and political intransigence a lot, but don't fear the alphabetical Armageddon of a dozen researchers swapping their As for Bs. I'm guessing about the number, by the way. None of the agencies would tell me how many analysts decide their U.S. rating or even how much of the decision is based on perceptions rather than numbers. A document provided by Fitch says its minimum committee size is generally four analysts including one "senior director," and that those average six to seven years of tenure. That's comforting. If I'm wrong, I'd hate for the world's financial system to be brought down by new hires.

Coalition calls for end to oil and gas tax breaks
Coalition releases study on cost of oil and gas subsidies to taxpayers, rallies in Albuquerque

Wednesday July 27, 2011, 1:49 pm
ALBUQUERQUE, N.M. (AP) -- Watchdog groups are calling on Congress to end tax breaks for the oil and natural gas industry.

Taxpayers for Common Sense, the Checks and Balances Project and others planned to rally Wednesday outside the Internal Revenue Service building in Albuquerque, N.M.

The groups have released a study showing that the subsidies cost New Mexicans $104 million a year.

The report also outlines political campaign contributions from the industry to New Mexico's congressional delegation.

Defenders of New Mexico's oil and gas industry say it's a major source of revenue for the state.

According to the New Mexico Oil and Gas Association, the industry paid more than $1.5 billion in taxes, fees and royalties to the state during the 2010 fiscal year. It also paid an additional $141 million in local taxes.

Fed survey: Growth slows across much of the US
Fed survey: Growth slows in nearly half the US, due to weakness in housing and manufacturing

Wednesday July 27, 2011, 2:06 pm
WASHINGTON (AP) -- The economy worsened in about half the country earlier this summer because of weak home sales and signs of a slowdown in manufacturing.

A Federal Reserve survey says seven of the Fed's 12 bank regions reported slower growth in June and early July compared with the spring. That's a worse showing than in the previous survey.

Of the remaining five districts, four reported modest growth. A fifth, the Minneapolis district, said its economy was disrupted by bad weather and the shutdown of Minnesota's state government.

The job market remained weak in most districts, the report said. Employers added few jobs in June, the government said earlier this month.

Stocks to Watch: SodaStream, Gap, Akamai and More...
Thursday, 28 Jul 2011

Stocks were narrowly mixed Thursday as investors continued to remain on edge ahead of a key vote on a bill to cut the U.S. deficit in Congress, even after encouraging news that weekly jobless claims fell more than expected.

The Dow Jones Industrial Average opened higher, after skidding nearly 200 points in the previous session.

Here are six stocks that are on the move:


SodaStream
[SODA  70.79    5.74  (+8.82%)   ]
The home carbonation system maker's price target raised to $80 from $60 at Oppenheimer.

----------

Gap
[GPS  19.52    0.56  (+2.95%)   ]
The apparel retailer was upgraded to buy from hold at Jefferies.

----------

Akamai
[AKAM  23.84    -5.64  (-19.13%)   ]
The internet services company's second quarter profit narrowly missed expectations.

----------

Whiting Petroleum
[WLL  55.76    -5.31  (-8.69%)   ]
The oil and gas company was downgraded to market perform from outperform at BMO Capital.

-----------

Sketchers USA
[SKX  16.95    2.65  (+18.53%)   ]
The footwear retailer was upgraded to buy from hold at BB&T Capital Markets.

----------

Linn Energy
[LINE  39.78    0.01  (+0.03%)   ]
The energy company's quarterly results missed estimates.

----------

Fed under pressure to act as world markets swoon...

Should read... Obama under pressure to act..."Act like he is a president that knows what the hell he is doing and Lead the country !"...but I know that want happen!!!


A trader works on the floor of the New York Stock Exchange August 4, 2011. REUTERS/Brendan McDermid
On Tuesday August 9, 2011, 9:44 am EDT
By Pedro Nicolaci da Costa

WASHINGTON (Reuters) - Federal Reserve policymakers began meeting on Tuesday under growing pressure to take some type of action to stem a financial market meltdown linked to fears of a new U.S. recession.

Members of the policy-setting Federal Open Market Committee started their meeting at 8 a.m. and are expected to deliver a policy statement around 2:15 p.m..

The Fed's policy toolkit looks rather depleted, making some question the likely effectiveness of any further monetary stimulus.

Still, some analysts think global equity declines and other market disruptions could force it to step up with some kind of intervention to try to calm the situation.

Shortly after the meeting started, the Labor Department said second-quarter productivity slipped at a 0.3 percent annual rate after a revised 0.6 percent fall in the first quarter -- mirroring the slowdown in economic growth in the first half of the year.

On Monday, U.S. stocks continued to slump, with the Dow Jones industrial average ending 5.55 percent lower following Friday's historic downgrade of the U.S. credit rating by Standard & Poor's.

Stock futures were up on Tuesday but trading was expected to remain volatile.

U.S. stocks saw their biggest one day drop since December 1, 2008, during the worst of the financial crisis of that year. Bank shares were severely punished, raising fears of a new market meltdown.

"If the Fed does nothing, it could prove to be a disappointment at this point," said JP Morgan analysts on a conference call to discuss the S&P downgrade.

Some economists argue the Fed is close to out of bullets. Interest rates are effectively zero and the Fed's balance sheet stands at a record $2.9 trillion after an unprecedented program of unconventional monetary easing.

Still, there are a few things the Fed could do to reassure markets, including to suggest it will revise down its growth forecasts -- the first signal that it is leaning toward further policy accommodation.

The central bank might also decide to begin reinvesting proceeds of maturing securities in its portfolio into longer-dated Treasury maturities, putting further downward pressure on long-term borrowing costs. Yet with those rates already at their lowest in over two years, there is a sense that such an effort might prove fruitless.

HOLDING FIRE ON BOND BUYS

Another move the Fed could make, but one that few expect, is another round of bond purchases. These are seen as controversial and only modestly effective, so policymakers will be reluctant to resort to them again.

"(It) depends on how confident the Fed is in their own forecast," said John Silvia, economist at Wells Fargo.

At the moment, it was difficult to imagine that such confidence was very high. In June, the Fed forecast growth of 2.7 percent to 2.9 percent for 2011. But that was before the rate of first-half expansion was revised sharply downward, and the employment picture worsened.

U.S. gross domestic product rose just 0.4 percent in the first quarter, and only 1.3 percent in the second quarter. Meanwhile, the jobless rate continues to hover above 9 percent with no clear hint that it is coming down soon.

Adding to concerns about the financial system, the latest rescue package from the European Central Bank, aimed at putting a floor on selling of Italian and Spanish bonds, was greeted with skepticism among investors.

Fed officials have noted that, while U.S. bank exposure to smaller European nations like Greece and Portugal is relatively minor, there is a certain contagion risk.

Market Overview...


11:30 am : Share volume is robust again this session, suggesting that there is a strong sense of conviction among traders. After months of anemic trading volume on the NYSE, share count on the big board has been bountiful for several consecutive sessions. The surge in participation comes as many retail investors react to the market's volatility.DJ30 +197.99 NASDAQ +74.23 SP500 +27.27 NASDAQ Adv/Vol/Dec 2013/1.20 bln/560 NYSE Adv/Vol/Dec 2666/665 mln/403

11:00 am : The major equity averages are sporting big gains, just shy of their session highs. As things currently stand, the stock market is on pace for its best single-session performance since a 3% surge in September 2010. Of course, this session's surge follows yesterday's 6.7% loss, which marked the worst one-day drop since December 2008.

The drastically improved mood among market participants has caused the Volatility Index (VIX) to drop more than 16% to about 40.0. The VIX, often euphemistically dubbed the Fear Gauge, surged yesterday to 48 for the first time since May 2010.DJ30 +180.52 NASDAQ +67.18 SP500 +25.22 NASDAQ Adv/Vol/Dec 2075/920 mln/479 NYSE Adv/Vol/Dec 2075/515 mln/334

10:35 am : The dollar index has been in negative territory all morning, which has helped provide price support to the commodity complex. The index has recovered modestly off of session lows and is around the 75.51 area. Overall, commodities are showing modest gains.

Crude oil futures have been in a general uptrend since early morning activity and recently moved back into positive territory. Crude hit session highs of $83.05/barrel about 20 minutes before floor trading began, and after its recent move, the energy component is back near that high. Currently, crude is up

Gold futures hit new all-time highs of $1782.40/oz in early morning trade. The precious metal has been in positive territory all session, but has been steadily pulling back since hitting that high. Silver, on the other hand, is showing sharp losses this morning and is by far the worst performing commodity so far today. Silver has been in the red all session and fell as low as $37.62/oz. In current activity, gold is up 1.1% at $1731.90/oz., while silver is down 4.0% at $37.78/oz.DJ30 +227.58 NASDAQ +74.82 SP500 +29.19 NASDAQ Adv/Vol/Dec 2075/846 mln/469 NYSE Adv/Vol/Dec 2673/483 mln/349

10:00 am : Stocks are surging to fresh morning highs. The effort comes after the stock market had its opening advance challenged, but managed to find support just above the neutral line.

Financials continue to lead this morning's climb. The sector is now up 3.7%, which makes it the top performing sector. Utilities are at the opposite end of things; the defensive-oriented sector is up just 0.2%.

Treasuries have actually trimmed some of their losses in the face of the stock market's rally. That has taken the yield on the 10-year Note to 2.37%. DJ30 +200.67 NASDAQ +60.05 SP500 +24.22 NASDAQ Adv/Vol/Dec 1865/250 mln/558 NYSE Adv/Vol/Dec 2328/175 mln/601

09:50 am : Stocks opened today's trade with impressive gains, but the move was quickly challenged by traders looking to sell the bounce. Pressure actually pushed the Dow to a fractional loss in negative territory before it was able to rebound alongside its counterparts.

Financials, which plummeted 10% in the prior session, have actually provided some support to the broad market this morning. The sector's 2.0% bounce comes as bargain hunters offer a bid for banks and diversified financial services plays after their beat down yesterday. DJ30 +93.92 NASDAQ +24.83 SP500 +10.07 NASDAQ Adv/Dec 1479/903 NYSE Adv/Dec 1855/1054

09:15 am : S&P futures vs fair value: +12.80. Nasdaq futures vs fair value: +13.70. Stock futures continue to suggest that the cash market will open with a gain in excess of 1%. Although that may sound strong, it is only modest when compared to the 6.7% drop suffered by the S&P 500 during the prior session's rout. Given that stocks have dropped so sharply in so little time -- almost 17% in 11 sessions -- many bargain hunters are showing a willingness to step in with a bid this morning. Some may even be encouraged by the notion that the FOMC may address the market's recent volatility and rekindled macro concerns when it issues its latest policy statement at 2:15 PM ET. No matter what the committee may say, though, many pundits continue to posit that the Fed is still without any new bullet to aim at the turmoil.

09:05 am : S&P futures vs fair value: +9.80. Nasdaq futures vs fair value: +8.70. Oil prices recently poked into positive territory, but were quick to slip back to a slight loss at $81.05 per barrel in the first few minutes of pit trade. The energy component had actually dropped well below $80 per barrel in overnight trade. Natural gas prices are up a solid 0.5% to $3.955 per MMBtu. Gold prices extended their climb by pushing to a new record high past $1750 per ounce, but the yellow metal has since eased back to $1747 per ounce, where it trades with a 2.0% gain. Silver has been slapped with some aggressive selling, however. The precious metal was last quoted with a 3.6% loss at $37.98 per ounce.

08:35 am : S&P futures vs fair value: +12.20. Nasdaq futures vs fair value: +12.20. Stock futures continue to sport a strong lead over fair value. Second quarter cost and productivity data, which were just posted, haven't really done anything to influence traders, though. Second quarter unit labor costs increased by 2.2%, as had been expected by many economists polled by Briefing.com. Productivity for the second quarter fell 0.3%, which isn't quite as steep as the 0.6% decline that had been anticipated, on average, among economists surveyed by Briefing.com.

08:05 am : S&P futures vs fair value: +12.00. Nasdaq futures vs fair value: +11.20. Stock futures are finally finding some relief following another extremely aggressive sell-off yesterday. The bid precedes the latest FOMC policy statement at 2:15 PM ET. Given recent market volatility and rekindled concerns about the macro environment, some participants anticipate that the committee will have something to say on the matter. Productivity and cost data for the second quarter are also on today's calendar; they are due at the bottom of the hour. Despite the improved tone to premarket trade, gold prices continue to climb. The yellow metal was last quoted with a gain of more than 2% at a new record above $1750 per ounce. Oil prices actually extended their downturn by falling below $80 per barrel overnight, but the energy component has since pared its loss to trade with only a fractional loss at $81.20 per barrel ahead of pit trade. Treasuries spiked higher in the prior session, but they have run into selling this morning. Early pressure has sent the yield on the benchmark 10-year Note up to 2.38%. The dollar is down, too. Renewed strength in the euro, and continued strength in the yen, has the Dollar Index down 0.5%.

06:51 am : [BRIEFING.COM] S&P futures vs fair value: +7.50. Nasdaq futures vs fair value: +2.00.

06:51 am : Nikkei...8944.48...-153.10...-1.70%. Hang Seng...19330.70...-1159.90...-5.70%.

06:51 am : FTSE...4962.24...-106.70...-2.10%. DAX...5708.72...-214.60...-3.60%.

In Play ® 

--------------------------------------------------------------------------------

11:58AM Google edging up toward its session high and yesterday's peak at 568.84/569.00 (GOOG) 567.59 +21.57 : 

11:49AM Gold futures extending bounce off of lows; now higher by $36.10 to $1749.10 (COMDX) : 

11:46AM RigNet expands contract and provides managed remote communication services to Hercules Offshore (HERO) global fleet (RNET) 13.15 -0.22 : 

10 Things You Need To Know Before The Opening Bell...

Mamta Badkar, On Wednesday August 10, 2011, 7:27 am EDT

Good morning. Here's what you need to know.

Asian indices were up in overnight trading with the Nikkei up 1.05%. Europe is mostly higher, but going back and forth. US futures are lower, as the rally fizzles out.

The FOMC's promise to keep rates ultra-low until 2013 is the talk of the day. Everyone's trying to figure out, still, what it all means. Goldman Sachs says: "QE3 is now our base case."

Yields on Italian treasury bills fell after the European Central Bank began buying the country's bonds. Italy sold $9.3 billion of bills today, and yields on its one-year bills fell to 2.959%, down from 3.67% at the July auction. Long-term Italian rates are also lower. Now here is the sad story of how Italy got to be such a wreck >

China's trade surplus surged to $31.5 billion in July, its highest point in over two years, with exports up 20.4% year-over-year, from 17.9% in June; and imports up 22.9% year-over-year, from 19.3% in June. The yuan jumped to a new high against the dollar on the news, but the outlook for China remains unclear amidst global economic uncertainty. Check out the 10 countries that will dominate world trade in 2050 >

The Bank of England has downgraded its growth forecast for 2011 on slower than expected global economic recovery. The bank cuts its growth forecast to 1.4% in 2011 and warned that inflation could surge to 5% this year.

With U.S. default narrowly avoided, President Obama has toughened his tone calling for federal spending that is aimed at creating jobs, and pulling away from talks of deficit cuts. He also added that democrats unlike Republicans see the government as a partner with the private sector. Check out the companies that will get crushed when the government stops spending >

Capital One Financial Corp. has agreed to buy HSBC's U.S. credit card unit for $32.7 billion. The sale is part of HSBC's $3.5 billion cost cutting plan.
The Treasury department releases its monthly budget for July at 2 PM ET. Consensus is for a deficit of $132 billion. Follow the release at Money Game >

In earnings news, Walt Disney beat expectations posting net income of $0.77 per share on revenue of $10.68 billion. The company's media networks arm reported a 5% rise in revenue, while revenue from its theme parks and resorts jumped 12%.
Another bank is hurting from its exposure to Eurozone debt. German Commerzbank was hit by a bigger than expected €760 million writedown on Greek bonds. The company's net profit was down 93% to €24 million and sales were down 24% to €2.4 billion. Refresher: Check out who gets crushed if Greece defaults >

BONUS - Angelina Jolie and her children were spotted painting at the Pottery Cafe in Richmond, London.

SEC investigating S&P's downgrade of U.S. debt: report

On Friday August 12, 2011, 1:40 am EDT
(Reuters) - The U.S. Securities and Exchange Commission (SEC) has asked rating agency Standard & Poor's (S&P) to disclose which employees knew of its decision to downgrade U.S. debt before it was announced last week, the Financial Times said, citing people familiar with the matter.

SEC's move is part of a preliminary examination into potential insider trading, the FT said.

The inquiry was made by the SEC's examination staff, which has oversight of credit rating firms, one person familiar with the matter told the newspaper.

However, the securities regulator is not aware of a leak from an S&P insider, nor was it aware of an aberrational trade, the paper said.

S&P and SEC could not immediately be reached for comment by Reuters.

The U.S. Senate Banking committee has begun looking into last week's decision by S&P's to downgrade the U.S. credit rating, a committee aide told Reuters on Monday.

10 Things You Need To Know Before The Opening Bell...

On Friday August 12, 2011, 7:23 am EDT

Good morning. Here's what you need to know.

•Following yesterday's explosive up-move in US markets, Asian indices were mixed in overnight trading with the Nikkei down 0.2%. Europe is in the green after ECB released lending data showing that banks didn't face liquidity issues. US markets aren't going anywhere.

•Also helping things in Europe: France, Spain, Italy and Belgium have begun a ban on short-selling today. France has banned short-sales of 11 stocks including Credit Agricole, BNP Paribas and Credit Suisse, that were dragging the CAC down yesterday. France is up about 2% today.

•More news of faltering recovery in Europe, as France's GDP growth remained flat in the April - June period, against a 0.9% rise in the first quarter. The 0% growth was attributed to a 0.7% drop in household consumption.

•Meanwhile, Greece's economy contracted 6.9% in the second quarter, but the figure is not based on seasonally adjusted data. Check out the updated guide to Europe's impending debt disaster >

•The Italian cabinet is meeting today to approve new measures to balance the budget by 2013, in a bid to ease concerns about the nation's public finances. This comes after Italian Finance Minister Giulio Tremonti's call for strong measures to balance the budget yesterday. Don't Miss: The sad story of how Italy got to be such a wreck >

•July retail sales came in line with expectations up 0.5%, and ex-autos and gasoline was up 0.3% >

•In earnings news, Nordstrom posted Q2 earnings of $175 million or $0.80 per share, on revenue of $2.72 billion. The company also raised its full-year profit outlook.

•GOP candidates faced-off at an eight-candidate debate, in Ames, Iowa late last night. Minnesota rivals Tim Pawlenty and Michele Bachmann had the most heated exchanges during the debate, while Mitt Romney directed his criticism at President Obama.

•Consumer sentiment data for August will be released at 9:55 AM ET, and business inventories for June will be released at 10 AM ET. Expectations are for a slight drop in consumer sentiment index to 63, and a 0.6% month-over-month change in business inventories. Follow the release at Money Games >

•It has been reported that Bank of America CEO Brian Moynihan met privately with Treasury Secretary Timothy Geithner and Federal Reserve governor Daniel Tarullo this week, as part of the bank's attempt to calm investor and employee concerns about its recent share slump. Check out the 16 strongest banks in the world >

•BONUS - Eva Longoria and George Lopez toasted their unemployment on air, as both their shows were cancelled.

4 Rules for the Seesaw Market...

The market roller coaster took another big dip down Wednesday, with the Dow tumbling more than 400 points midday before stabilizing a bit.

If you're like most non-professional traders, these kinds of wild market swings — down 635 Monday, up 430 Tuesday, down 400 Wednesday -- can be gut-wrenching, confusing and downright scary. (Rest assured, many professionals feel the same way - they just don't admit it.)

For those of you feeling paralyzed by the panic, here are some time-honored rules for a seesaw market:

If You Can't Take the Heat, Get Out: As my Breakout colleague Jeff Macke likes to say, if the market is keeping you up at night, you shouldn't be in it. This is particularly true for people at or near retirement age; you simply don't have the time (or income stream) to make up for big losses, a hard lesson many aging Baby Boomers learned in 2008. The same rule applies if you have funds in the stock market earmarked for a specific event in 5 years or less, like a house purchase, wedding or college tuition.

Contrary to what financial advisers tell you, there's no law stating your money has to be in the stock market, just as, contrary to what financial advisers tell you, there's no guarantee stocks will perform well "in the long run."

Don't Panic: If you don't need the money in your retirement account in 5 years or less, you're better off sitting tight vs. cutting and running. Unfortunately, many investors simply can't take the pain and are doing just that.

Transfers in the 4.7 million 401(k) accounts monitored by consultant Aon Hewitt exceeded $1.6 billion on Monday, more than three times the normal level, ABC News reports. "All of the assets moved Monday were taken out of stock funds and invested primarily in bond funds."

Historically speaking, retail investors get scared and sell out of stocks at important market bottoms. Pulling out after a big decline means locking in those losses, a mistake many investors compound by turning around and buying assets that may already be at inflated prices, such as gold and Treasuries in the current environment. That's why Wall Street pros refer to us as "the dumb money."

Have a Plan: Sometimes the most boring advice is the best advice.
Investors who have previously established set patterns of portfolio rebalancing, diversification of investments and long-term goals for their money tend to do better -- both emotionally and financially -- during periods of dramatic market upheaval, says Liz Ann Sonders, Charles Schwab's chief investment strategist.

Learn from Your Mistakes: As of July 1, 80% of workers in their 40s and 50s had more money in their 401(k) than they did in 2007, meaning they'd recouped the losses from 2008, according to data compiled for AP by the Employee Benefits Research Institute. After Monday's 6.66% decline, that figured had dropped to 64%, suggesting a lot of investors were just waiting to get back to even after 2008 but hadn't changed their behavior.

Just as refusing to open statements from your broker or 401(k) administrator doesn't count as "financial planning," neither does "hoping and praying" the market will come back.

Nobody knows how much longer the current market squall will last or how much lower stocks will go before it ends. Then again it's quite possible the selloff ends today (or tomorrow) and stocks will return to their rallying ways. What can be said with near-100% certainty is this won't be the last time the stock market embarks on a heart-stopping decline.

So sometime when the market's closed or (ha-ha) quiet in the next few days, take a minute to ask yourself a few questions:

•Am I doing anything different today then I was doing before the market crashed in 2008...or 2000?

•How much volatility can I really stomach and how much money can I really afford to lose, even if just on paper, even if just temporarily? In other words, what is your risk tolerance?

•Can I really do this myself? If the answer is "no," then you're much better off finding a financial adviser. A good one can help you navigate the stock market's highs and lows; he or she won't promise you the moon, and the fees paid will be well worth your piece of mind and your bottom line.

In the end, the best advice anyone can give you is this: Investor, know thyself...and proceed accordingly.

10 Stocks to Watch: Nvidia, AT&T...
On Friday August 12, 2011, 8:12 am EDT

NEW YORK (TheStreet) -- Chipmaker Nvidia swung to a profit, posting solid second-quarter numbers Thursday and delivering robust guidance.

Excluding items, Nvidia earned 32 cents a share in the June-ended period, compared to earnings of 8 cents a share in the prior year's quarter. Analysts surveyed by Thomson Reuters were looking for earnings of 25 cents a share.

For the third quarter, Nvidia expects sales between $1.06 billion and $1.08 billion, above Wall Street's estimate of $1.05 billion.

Shares were surging 10.4% to $14.81 in premarket trading Friday.



--------------------------------------------------------------------------------


AT&T hired Bank of America to advise it on asset sales as it seeks government approval of its planned acquisition of T-Mobile USA, according to a Wall Street Journal report.

AT&T shares were rising 0.2% to $28.50 and Bank of America shares were up 0.6% to $7.29.



--------------------------------------------------------------------------------


Department store J.C. Penney posted second-quarter earnings of 7 cents a share, in line with estimates.

J.C. Penney shares were rising 4.3% to $26.83.



--------------------------------------------------------------------------------


Department store Nordstrom reported second-quarter earnings of 80 cents a share vs. 66 cents a share last year. The Wall Street consensus target was for earnings of 74 cents a share.

The company projected earnings of $2.95 to $3.10 a share, up from $2.80 to $2.95 a share for the year. Analysts, on average, have been expecting earnings per share of $3.05.

Nordstrom shares were up 5% to $44.40.



--------------------------------------------------------------------------------


Red Robin Gourmet Burgers reported an adjusted profit of $7.5 million, or 48 cents a share, for the three months ended June 30 with revenue up 7.2% year over year to $215.8 million. The average estimate of analysts polled by Thomson Reuters was for a profit of 36 cents a share in the June period on revenue of $213.3 million.

Red Robin shares were climbing 12% to $33.85.



--------------------------------------------------------------------------------


Bank of New York Mellon was sued Thursday by Virginia and Florida over allegations the bank mishandled foreign exchange transactions for the states' pension funds.



--------------------------------------------------------------------------------


Reinsurer Validus has sued Transatlantic to force Transatlantic into considering its takeover offer over a deal with Allied World Assurance.

Validus is arguing that Transatlantic is "arbitrarily" snubbing it despite the higher value of its offer over Allied's.



--------------------------------------------------------------------------------


Wal-Mart is discussing the possibility of buying the Brazilian unit of French retailer Carrefour two years after a previous attempt at striking a deal failed due to a disagreement on pricing, The Wall Street Journal reported, citing sources familiar with the situation.

UBS is advising Wal-Mart on a potential offer, which could be between $6 billion and $8 billion, the Journal reported.

8 Blue Chips to Add Your Shopping List...
August 15, 2011 

The Dow broke a record this past week by moving 400 points, four days in a row. Whenever markets show this kind of whipsaw action investors tend to shy from the fundamentals. Now more than ever, investors need to adhere to the basics. Some traders are trying to time the bottom, but as "investors" this is unnecessary. Investors are better off having a list of companies they are looking to buy but are not at a safe discount yet. Having a shopping list of well run companies makes it easier to find your bargains when the market panics.

Here are some blue chip companies with well established brands and international exposure. They have proven management and growing dividends that in all create safety and sustainability for investors. These stocks are great additions to your shopping list and a few are trading low enough for a position.

American Express (AXP): American Express is one of the most well run companies on our list. It has ever increasing exposure to the emerging middle class abroad. The company pays the lowest yield on the list at 1.6% and has increased it since 2003. It announced share repurchases earlier in the year and was one of the financials who did not cut its dividend during the last recession.

ConocoPhillips (COP): COP is trading just 30% over its book value. It has great management paired with a hefty yield of 4%. COP has really bounced back from its lows in 08' and has proven its profitability last year returning $11 billion in profits. It has solid fundamentals and the benefits that come with a potential rise in oil prices. Conoco is currently trading with a P/E of 8.30.

Coca Cola (KO): Coke is one of the most recognizable brands in the world. It has sales in almost every country. Its management has a long term plan to grow the company which is called "2020 Vision". As a defensive investor, it is always important to find management with their eyes on the horizon. Coke has a yield of 2.8% and has raised it consistently longer than many of us have been alive. Including dividends and share repurchases, Coke has returned billions to shareholders in recent years. Not to mention, it is Buffett's favorite holding.

Proctor and Gamble (PG): Proctor and Gamble is a true multinational. It has strong exposure overseas and is increasing market share in places like China and Russia. PG has been improving its efficiency since the recession and is heavily invested in emerging markets. It receives 58% from international sales. The company currently yields 3.4% and has raised its dividend 55 years straight.

McDonald's (MCD): McDonald's Jim Skinner is a fantastic CEO. His leadership has been proven by the success since he took over 7 years ago. The company has profited from restructuring under Skinner, but more importantly it has not stopped. McDonald's management is consistently adapting to a changing and increasingly international consumer. McDonald's receives over 2/3 of sales from overseas. Its P/E is a little high for me at 17. It might not have a margin of safety at the moment, but should certainly be on your shopping list. Its dividend yields 2.8% and has increased it every year since 76'.

PepsiCo (PEP): Pepsi, like Coke operates in the beverage industry. A very important distinction between the two, is Pepsi's snack business, Fritolay. Even Buffett, Coke's largest shareholder, has praised Fritolay saying "Fritolay is a fabulous business". Pepsi's beverage industry actually accounts for less than 50% of its total revenue. This diversification makes Pepsi less susceptible to sharp increases in costs. Pepsi's international sales account for about 50% of revenue. Its dividend yields 3.26% and has been raised 38 years in a row.

Exxon Mobil (XOM): Like COP, Exxon is Big Oil. But in this case, much bigger. Exxon has the largest market cap of any company traded on the NYSE. XOM has some of the highest oil production in its industry. This production coupled with its industry leading resource base makes XOM very attractive. Like the others, its management has a rich history of share repurchases. It currently yields 2.6% and has raised that dividend for over 25 years. The company faired better than most in the recent recession which can be attributed to its size, diversification, and solid financial position. It trades with a P/E of 10.20

General Electric (GE): GE is similar to PG in that it is increasing its focus on emerging markets. Over 50% of its total sales comes from overseas.The company has lower value metrics than most on the list including a P/B at 1.30. Its dividend yields 3.77% but had to be reduced during the recession. Its dividend is not as reliable as others on the list, but its payout ratio is not to high at 40%. GE has obviously gone through struggles in recent years but at this price, it is hard to overlook.

GE, COP, and XOM are the biggest bargains on the list. These are the companies I would consider initiating a position on while prices are this low. The others have more room to fall before they are at a definitive bargain, but they are all solid holdings if you already have a positition. If anything, they will let you sleep better at night.

Here is another article by SA Contributor "AssetInflation.com" with a different approach to similar Blue Chips.

Market Roller Coaster About to End ?
Tuesday August 16, 2011, 10:04 am EDT

NEW YORK (TheStreet) -- Summer is a time when many Americans seek out amusement parks for the thrills of riding a roller coaster. The climbs and drops at high-speed deliver an exciting mix of fear and exhilaration. But knowing the extent of the highs and lows and when it is going to be over play a crucial role in the fun of riding a metal roller coaster. Riding a market roller coaster offers no such assurances and is no fun at all.

To say last week was volatile for the markets would be a major understatement. The stock market posted one of its most volatile weeks ever with swings of greater than 4% during each of the first four days of the week, changing direction with each day. This pattern of performance has never before been seen in the 83-year history of the S&P 500 index. By Friday, stock market turbulence slowed. For the week, the S&P 500 was down 1.6% adding to the losses that now total 13% since the recent peak on July 7.

While the U.S. debt downgrade in the week before last grabbed a lot of attention and added to the lingering pessimism heading into last week, one of the primary drivers of last week's volatility was that eurozone leaders, while making some successful efforts, have not gone far enough to resolve the debt problems in the eurozone.

Investors feared a downgrade to France and another banking crisis stemming from some French banks noted by Moody's as at risk of a downgrade due to their exposure to troubled debt. Another key driver was the better-than-expected economic data on retail sales and the labor market along with the Fed confirming they intend to keep short-term interest rates low until mid-2013. This optimism that the U.S. economic soft spot was firming vied with the concern that the pace of economic growth in the United States may soften further as stimulus begins to fade.

While last week's volatility is unprecedented, we can take some comfort that the overall moves and sentiment in the market this summer are familiar; they echo those of last summer.

At the low point of last week, the S&P 500 was down 17%, similar to last summer's volatile 16% peak-to-trough decline.
The 10-year Treasury note yield has fallen 1.6 percentage points from the high of the year, similar to last summer's 1.6 percentage point decline from the high of the year.
The drivers of the decline are similar to last summer, as well. Last year, Europe's debt problems were a main cause of the market's decline, as was an economic soft spot in the United States as stimulus began to fade when the Federal Reserve ended the QE1 bond buying program and state and local governments were cutting back on spending.

So, maybe we have been on this market roller coaster before, and, if so, we might be near the end. Last year, the roller coaster did not leave the track and the summer plunge turned into a steep climb as stock and bond yields rose to new post-recession highs. We continue to believe this summer's drop will end with similar results and ultimately produce a modest single-digit gain for the S&P 500 in 2011.

We believe the fundamental underpinnings of solid corporate earnings growth (up 19% year-over-year in the second quarter), low valuations (the price-to-earnings ratio fell to levels not seen since 1989 during the lows of last week), and firming economic data (as Japan's economy rebounds from recession) will combine to support stocks, high-yield bonds, and other business cycle-sensitive investments.

However, there are factors we are watching to determine if this volatility is instead a precursor to a deeper and longer lasting bear market. In the next few weeks, there are a number of potentially market-moving events that may continue some of the volatility that was so pronounced last week.

With all the attention on Europe's sovereign debt problems, this week's meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy will garner much attention. The market wants to know how much larger the European bailout fund is going to be and under what conditions it may be used, although this is unlikely to be determined for a number of weeks.
A lot of retailers report second-quarter earnings this week. But the solid results will be tempered by an outlook clouded by the sharp decline in confidence seen in the widely-watched University of Michigan consumer sentiment index falling all the way back to the levels during the financial crisis. The question for markets is whether the stock market's violent sell off has become such a negative for consumer and business confidence that it will impact the economy and profits.
In 2010, the Fed's annual Jackson Hole meeting at the end of August hinted that QE2 may be coming and got the markets to acknowledge improving economic and profit data and rebound. The Jackson Hole meeting at the end of the month will be closely watched for indications of how the Fed may respond to further economic weakness. In the meantime, this week Dallas Fed President Richard Fisher will speak. Fisher is one of three Fed officials who dissented to the Fed's statement that interest rates would remain low through mid-2013 and his comments may add to volatility.
U.S. economic growth has started to show signs of improving. This can be seen in a number of economic readings including the fall in initial jobless claims to a four-month low of 395,000 in the past week, retail sales running 4% to 5% above a year-ago levels, and signs that industrial production has increased. In the coming week, gloomy housing-related data is on tap. But stronger readings on manufacturing in the Philadelphia Fed survey along with leading economic indicators may provide positive data points.

Although we expect volatility to continue, we foresee a more muted level than last week's market roller-coaster ride and a climb over the months ahead. In general, we advise investors to do what they normally do on a roller coaster: hang on tightly, grit your teeth, scream if you need to, but do not jump off.

It's a Technical Mess All Over the World:
Tuesday August 16, 2011

As markets around the world put the brakes on a nascent comeback rally after only 3 sessions, legendary chart analyst Louise Yamada says it's a technical mess all over the world. "We are at a critical juncture right now," warns Yamada. Be it the BRICs, other Emerging Markets, or Europe, Yamada says "all of them have come into long-term sell signals" with the exception of Japan, Thailand, Jakarta, and a few U.S. markets.

As if the debt concerns out of Greece, Italy, and France weren't enough, word comes today that the global slowdown is hitting Europe's largest and most stable economy: Germany. The country reported a weaker than expected second-quarter GDP rate of 0.1%, compared to 1.3% in Q1.

"Germany was the strongest market and it had a very severe setback...and went right to the bottom of the 2010 support," says Yamada. "So any further decline there and you bring into question whether the market goes to the 2009 lows."

In the case of the Germany's benchmark DAX (^GDAXI), that would be a fall to about 3600, nearly 40% below current levels. The index has suffered a 16% drop in August alone.


Another global powerhouse is also in question. Yamada points out that Hong Kong's Hang Seng Index (^HSI) is at the same ''critical juncture." Right now it sits at 2010 support levels and is now looking at the possibility of a further 40% support gap back to its 2009 trough.

But before you race off in search of a safe haven, Yamada says it's best to wait for some clear confirmation that the global downtrend has reversed. Until that happens, "rallies would be best used to lighten some positions."

Economists see growing risk of global recession
Weak economic data fuel recession fears, contribute to sharp fall in financial markets

August 18, 2011, 7:03 pm EDT
WASHINGTON (AP) -- Discouraging economic data from around the globe have heightened fears that another recession is on the way.

Fresh evidence emerged Thursday that U.S. home sales and manufacturing are weakening. Signs also surfaced that European banks are increasingly burdened by the region's debt crisis and sputtering economy.

The rising anxiety ignited a huge sell-off in stocks that led many investors to seek the safety of U.S. Treasurys.

Economists say the economic weakness and the stock markets' wild swings have begun to feed on themselves. Persistent drops in stock prices erode consumer and business confidence. Individuals and companies typically then spend and invest less. And when they do, stock prices tend to fall further.

"A negative feedback loop ... now appears to be in the making" in both the United States and Europe, Joachim Fels and Manoj Pradhan, economists at Morgan Stanley, said in a report Thursday. Both economies are "dangerously close to a recession. ... It won't take much in the form of additional shocks to tip the balance."

The risk of a recession is now about one in three, according to Morgan Stanley and Bank of America Merrill Lynch.

Among the worrisome economic signs:

-- A survey by the Federal Reserve Bank of Philadelphia shows that manufacturing in the mid-Atlantic region contracted in August by the most in more than two years. The steep drop, on top of a smaller decline in a New York Fed survey this week, means U.S. manufacturing probably contracted in August, economists said.

It would be the first decline since July 2009 -- a worrisome sign because manufacturing has been a key source of U.S. growth in the two years since economists say the Great Recession ended.

-- U.S. home sales fell in July for the third time in four months, the National Association of Realtors said. Sales dropped 3.5 percent to a seasonally adjusted annual rate of 4.67 million homes. That's far below the 6 million homes that economists say must be sold to sustain a healthy housing market.

Sales are lagging behind last year's pace -- the weakest since 1997. "There seems to be a correlation between the stock market and home prices," said Andrew Davidson, a New York-based mortgage industry consultant.

-- In Asia, Japan's exports fell for a fifth straight month. The world's No. 3 economy has fallen into a recession since its earthquake and tsunami in March. Its weakness is contributing to the global slowdown.

-- Consumer prices rose 0.5 percent in July, mostly due to more expensive gas and food. The "core" price index, which excludes volatile food and energy prices, rose 0.2 percent. The higher prices add to the burdens for Americans already squeezed by stagnant pay, though economists don't expect prices to rise much further. And gasoline has fallen this month.

Investors are also growing more anxious about Europe's sputtering economy and its leaders' ability to resolve the debt crisis. European bank stocks accelerated their fall Thursday.

European banks are being forced to pay more for the short-term loans they need to finance day-to-day operations. Some with heavy exposure to the debts of Greece and other weak countries are relying on loans from the European Central Bank because other private banks are reluctant to do business with them.

The ECB said Thursday that one bank had borrowed $500 million a day for seven days through the ECB's dollar lending program. It was the first time since February that a bank had used the program. The bank wasn't identified.

After all the volatility of the past month, the Dow Jones industrial average has lost more than 14 percent since July 21. That includes Thursday's drop of more than 419 points.

Some sectors of the U.S. economy still show strength. Retail sales are up. Gas prices have fallen. And job growth has been consistent, though below what's needed to reduce the unemployment rate.

Yet a consumer survey taken this month showed confidence in the economy fell to the lowest level in 31 years.

Morgan Stanley's calculation of a one-in-three risk of a new recession hinges, in part, on its expectation that Congress will let a Social Security tax cut, a business tax credit and extended unemployment benefits expire at year's end. It calculates that the expiration of those measures would reduce U.S. growth by 0.5 to 1 percentage point in 2012.

Jitters over the economy and financial markets may also reduce auto sales. That would be a blow to an industry that reported strong profits and healthy hiring earlier this year. J.D. Power and Associates has cut its 2011 sales forecast last week by 2 percent and its 2012 forecast by 3 percent.

On Tuesday, France's president, Nicolas Sarkozy, and German Chancellor Angela Merkel held an emergency meeting to discuss the continent's sluggish economy and debt crisis. Disappointment in the outcome of the meeting has contributed to the sell-off in European bank shares.

"All we got was more taxes and more bureaucracy and more austerity," said Neil MacKinnon, an economist at VTB Capital in London.

The German economy, Europe's biggest, slowed to a growth rate of 0.1 percent in the April-June quarter, after expanding at a 1.3 percent rate in the first quarter of this year. France's growth fell to zero in the April-June period after a 0.9 percent quarterly rate in the first quarter.

Still, Neil Dutta, an economist at Bank of America Merrill Lynch, said that most of the negative indicators, including the Philadelphia Fed index, reflect sentiment, rather than actual economic activity. Measures of the actual economy, like the number of people seeking unemployment benefits, haven't declined nearly as much.

The number applying for benefits rose 9,000 last week to a seasonally adjusted 408,000. The four-week average, a more reliable gauge of the job market, dropped for a seventh straight week to 402,500, the lowest level since April. The report suggests that the economy is creating jobs but not nearly enough to lower the high unemployment rate.

"We are not ready to say this is the death knell for the U.S. economy," Dutta said. Still, recession risks are rising, he added.