• In spite of tense geopolitical situations in the Middle East, light sweet crude for July delivery yesterday (Monday) fell $2.62, or 3.8%, to settle at $66.93 a barrel on the New York Mercantile Exchange (NYMEX). Large and violent protests in Iran over the outcome of its recent election would normally raise concerns about supply disruptions and drive up the price of oil. Instead, the market is looking past this tense backdrop in the world’s No. 4 oil producer because of a large supply worldwide, Alaron Trading energy analyst Phil Flynn told CNN Money.

• The Securities and Exchange Commission (SEC) charged a brokerage firm and several individuals with raising money from investors to feed Bernie Madoff’s Ponzi scheme. Cohmad Securities Corp., its chairman Maurice Cohn, Chief Operating Officer Marcia Cohn and representative Robert Jaffe have all been charged with securities fraud, CNN Money reports. The Cohns and Jaffe allegedly courted investors for Madoff’s grand scheme, which may get Madoff up to 150 years in prison and $170 billion in restitution.

• The chief executive officer and president of the world’s largest third-party video game publisher fired a shot over Sony Corp.’s (NYSE: SNE) bow, taking the electronics giant to task over the high price of its PlayStation 3 console and going as far to say his company may pull its support if a price drop doesn’t happen soon. Activision Blizzard Inc.’s (Nasdaq: ATVI) Bobby Kotick said his company paid Sony $500 million in royalties and other goods last year, according to the Times Online. “They have to cut the price, because if they don’t, the attach rates [the ratio of games purchased to a console] are likely to slow. If we are being realistic, we might have to stop supporting Sony,” Kotick said. “When we look at 2010 and 2011, we might want to consider if we support the console – and the [PlayStation Portable] too.” Activision is the company responsible for the some of the sector’s largest franchises including “Guitar Hero,” “Call of Duty” and the “Tony Hawk” series of skateboarding games. A loss of support from Activision would be a huge blow for Sony’s gaming arm, which lost $597 million last year. Sony’s PlayStation 3 is currently third in a three-horse video game race behind Nintendo Co. Ltd.’s (ADR OTC: NTDOY) Wii and Microsoft Corp.’s (Nasdaq: MSFT) Xbox 360.

• In a sign that may show investors have let their guard down, technology stocks have significantly outperformed the broader market, according to MarketWatch.com. Since its March low, the tech-heavy Nasdaq Composite Index is up more than 40% and nearly 13% for the year. “Technology tends to be a leader in the early stages of an economic turn.,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald. “That’s what we look for as confirmation of a sustainable rally — money rotating into a sector that historically is seen as consumer- and business-sensitive, and requiring more leverage in terms of borrowed money, because it is more sensitive to the economy.” Still, Nasdaq’s notorious volatility was on display yesterday (Monday), as it fell 3.35%, more than both the Dow Jones Industrial Average and the Standard & Poor’s 500 Index.

• Restructuring costs and merchandise markdowns contributed toWalgreen Co.’s (NYSE: WAG) declining profit, which fell by 8.7% in the quarter ended May 31. The drugstore chain reported a net income of $522 million, or 53 cents per share on $16.2 billion in revenue. That compares to a net income of $572 million, or 58 cents per share on revenues of $15 billion in the same period last year. Wall Street was expecting Walgreens to earn 56 cents per share. The company’s shares closed at $29.64 yesterday (Monday), down 5.7%.

• Ford Motor Co. (NYSE: F) and General Motors’ (OTC: GMGMQ) Chevrolet division are close to eliminating a long-criticized quality gap with Toyota Motor Corp. (ADR NYSE: TM), according a closely watched J.D. Power and Associates survey. The top three spots in the survey went to luxury brands, while Chevrolet, Ford and Toyota were in what amounted to a statistical dead heat further down in the rankings, Reuters reported. “Have the leading domestic nameplates caught up with Toyota? The answer is almost,” Dave Sargent, vice president for auto research at J.D. Power said. Toyota’s Lexus brand took the top spot, while Porsche and GM’s Cadillac were Nos. 2 and 3 respectively.

Source: Investment News Briefs Tuesday, June 23, 2009

Monday
Earnings Announcements: Walgreens (WAG)

Tuesday
Economic Reports: Existing Home Sales

Earnings Announcements: Oracle (ORCL)

Wednesday
Economic Reports: Durable Orders, New Home Sales, FOMC Rate Decision

Durable Orders are expected to fall dramatically since last month. I am not sure if this is due to no more income tax refund checks to spend on big ticket items or not, but with Personal Spending for May expected to increase, a drop in Durable Orders is surprising.

New Home Sales are expected to climb this month, and after last weeks surprise in Building Permits and Housing Starts, I have a hard time trying to figure out the New Home Sales report. If I had to pick, I would expect the report to meet or beat expectations. Just a gut feeling.

The FOMC Rate Decision is announced at 2:15, and I don’t expect a change to be made to the current 0.0-0.25 percent rate

Earnings Announcements: Monsanto (MON), Rite-Aid (RAD),

Thursday
Economic Calendar: Q1 GDP Final

Expectations are for no revision to the first quarter GDP figure. At this point, I doubt there would be a surprise showing improvement. If anything, the report may show a tenth of a point or so larger contraction for the first quarter GDP.

Earnings Announcements: Con-Agra (CAG), Palm (PALM)

Friday
Economic Reports: Personal Income and Spending, Michigan Sentiment

As mentioned earlier, Personal Income and Personal Spending for May are both expected to show an increase. I guess the surprise is that the expected increase in spending is larger than the expected increase in income. With money tight for everyone, an increase in spending is quite surprising.

The Michigan Sentiment reading is expected to show no change since the last report, which is about what I expected. With rising gas prices, uncertainty about the economy and slowing  job losses, the consumer has many offsetting considerations.

Source: Will Housing Continue Its Uptick? GDP Could Scare The Market on Thursday

Worries that the economic recovery could be tepid have wilted the optimism that drove the S&P 500 up by as much as 40 percent from the 12-year low in March.

Exxon Mobil Corp (XOM) and Chevron Corp (CVX) were the biggest drags on the Dow as the price of oil fell below $68 a barrel on the stronger dollar. Exxon was down 2 percent to $69.61, while Chevron fell 2.5 percent to $66.34.

While higher oil prices can be a boon for energy companies, rising prices can force consumers to further curb spending, potentially stalling any budding stabilization.

“While the worst might be over, it doesn’t mean we’re off to strong growth in any of the major economies globally,” said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.

The World Bank said prospects for the global economy remain “unusually uncertain” as it cut 2009 growth forecasts for most economies.

The Dow Jones industrial average fell 109.66 points, or 1.28 percent, to 8,430.07. The Standard & Poor’s 500 Index gave up 15.93 points, or 1.73 percent, at 905.30. The Nasdaq Composite Index lost 36.54 points, or 2 percent, to 1,790.93.

The S&P 500 is still up nearly 34 percent from the March trough.

Walgreen Co. (WAG) fell 4.1 percent to $30.14 after the big drugstore chain posted slightly lower third-quarter profit as shoppers stuck to the necessities. In the same sector, CVS Caremark Corp slid 2.5 percent to $66.34.

On the Nasdaq, Gilead Sciences Inc was down 2.1 percent at $46.03 after Morgan Stanley (MS) cut its price target on the company’s stock to $59 from $62.

Apple Inc swung between gains and losses and were off 1 percent to $138.13. Apple said it sold more than 1 million units of its newest iPhone in the first three days of the launch.

But over the weekend it was reported Apple (AAPL) Chief Executive Steve Jobs had a liver transplant about two months ago. Jobs is expected to return to work later this month.

Investors are also cautious ahead of a Federal Reserve meeting that starts on Tuesday, bracing for Fed guidance on growth and any hints on expanding the central bank’s $300 billion program of Treasuries purchases.

NEW YORK, June 22 (Reuters)

• Abu Dhabi’s state-controlled International Petroleum Investment Company (IPIC) said it would buy a 9.1% stake in the German automaker Daimler AG (DAI) for almost $2.72 billion (2 billion euros). It also pumped $1.41 billion into Aabar Investment PJSC, giving the Middle East emirate majority control in the IPIC, Reuters reported.

• Tata Motors Ltd. (ADR: TTM) announced it will begin sales of the Nano, the world’s cheapest car. It will accept bookings for the new car from April 9 and April 25, and customers will have to pay full price (about $2,000) as a deposit, Bloomberg reported.

• Walgreen Co. (WAG) took reconstruction charges and spent more promoting nonprescription items in its second-fiscal quarter ended Feb. 28, leading to a profit of $640 million, or 65 cents per share. The earnings beat expectations, and Morningstar Senior Analyst Mitch Corwin told Reuters that he believes the company will “emerge from this downturn a better firm.”

• U.S. banks now face increasing loan delinquencies from owners of skyscrapers and shopping malls, as commercial property prices plummet. Commercial property prices are down almost 20% in the past year, and with the global recession worsening, there’s “significant stress” in the market, William Schwartz, a credit analyst at DBRS Inc. in New York, told Bloomberg. The country’s 10 biggest banks have $327.6 billion in commercial mortgages, which face a wave of defaults as office vacancies grow and retailers and casinos go bankrupt.

• Gannett Co Inc. (GCI) will force employees to take a new round of furloughs in April, May and June to save money as newspaper advertising revenue slides. Gannett was among the first U.S. newspaper publishers to furlough workers to cut costs as ad revenue sinks and people forsake printed papers to get free news on the Internet. The furloughs come after a one-week unpaid leave saved the company $20 million, according to a memo from a company executive obtained by Reuters.

• Oil prices hit their highest level in nearly three months yesterday (Monday) as a U.S. plan to purge banks of toxic assets triggered a rally on Wall Street, Reuters reported. U.S. crude rose $1.73 to settle at $53.80 a barrel on the New York Mercantile Exchange, after climbing as high as $54.05, its highest price since December 1. London Brent crude rose $2.25 to $53.47. Dealers said the bank plan could brighten the outlook for global business and consumer energy demand.

• TreeHouse Foods Inc. (THS), whose largest customer is Wal-Mart Stores Inc. (WMT), said the recession hasn’t stalled plans to make “substantial” acquisitions and reach $2 billion in sales in a consolidating private-label food industry, Bloomberg reported. The recession has spurred growth in  private-label goods from name brands as consumers look for ways to save money. Treehouse, whose roots trace back to Keebler elves, has gained 24% in the past 12 months, compared with a 39% drop in the Standard & Poor’s Smallcap 600 Index (IJR).

Source: Global Investment News Briefs Tuesday March 24, 2009

Even bellwhether Wal-Mart Stores Inc. (WMT), which had managed to dodge the cold winds of recession over the past year, was clobbered by the economic meltdown.

The discount retailer missed big on its December same-store sales numbers.  And across the board, a chorus of large retailers chimed in with similar, disappointing news.

Altogether, it may add up to the worst holiday-shopping season in four decades, as rising unemployment and tightening credit forced consumers to the sidelines during the all-important fourth quarter.

Citing the impact of slower than expected sales at its Sam’s Club warehouse stores and international units, the WalMart posted a 1.7% increase in same-store sales. The world’s largest retailer also cut its fourth quarter earnings forecast.

“The current economy remains challenging for all businesses, and retailers have already seen customers pull back on discretionary spending,” Tom Schoewe, Wal-Mart’s finance chief told the Financial Times. “Consumers are very focused on value and necessities.”

At first, consumers had crowded discount stores seeking lower-priced goods, but surprised investors must now cope with a retail environment where even Wal-Mart seems vulnerable.

“I am shocked and disappointed,” retail analyst Britt Beemer, chairman of America’s Research Group, told CNNMoney.com.  Because of its low prices and aggressive discounts, Beemer had pegged Wal-Mart as the clear winner of the holiday shopping season and was expecting the retailer to post a 3% sales gain in December.

Overall, same-store retail sales dropped 1.7% in December, the International Council of Shopping Centers reported. Same-store sales measure sales at stores open for more than a year, and are considered to be an important indicator.  Sales declined 2.2% in the last two months of the year – the biggest such drop since the group started tracking the data in 1970.

Damage was widespread and deep, pummeling not only discounters but high-end marketers. Same-store sales at luxury retailer Neiman Marcus Group Inc. sank 28% in December. Saks Inc. (SKS) posted a 20% sales decline, twice as large as analysts estimated, even after markdowns of as much as 70% on designer goods.

Macy’s (M) said same-store sales fell 4% and it will close 11 underperforming stores in nine states, affecting 960 employees. The department store chain expects to earn between 90 cents and $1 per share for the quarter ending Jan. 31, below the consensus estimate of $1.12.

“This has been the most challenging economic environment in memory,” Macy’s CEO Terry Lundgren said in a statement.

Any sales rebound in the coming year will have to weather strong headwinds from surging unemployment.  Although initial unemployment claims fell last week, they are still up 42% over 2007, the Labor Department reported.  Continuing claims rose by 101,000 to 4.61 million in the week ending Dec. 27, the highest level since November 1982.

The Labor Department is set to release the December jobs report today (Friday). Economists had expected a loss of 500,000 jobs last month, but many are revising forecasts upwards.  A report from payroll processor ADP projected job losses of 693,000 as reported by Money Morning on Thursday, capping what could be the worst year of job losses since the end of World War II.

And in more bad news on the unemployment front, Walgreen Co. (WAG) the nation’s No.2 drugstore chain said it is eliminating about 1,000 jobs, or about 9% or its work force.

“That does not bode well going into January-February, where we go into a lull period and there’s really no reason to buy until spring,” Adrienne Tennant, an analyst at Friedman, Billings, Ramsey & Co. (FBR) in Arlington, Virginia, told Bloomberg Television.

Even the good news was bad. J.C. Penney Co. (JCP) same-store sales fell 8.1%, better than it and analysts had estimated. Kohl’s Corp.’s (KSS) dropped 1.4%, helped by last- minute shopping and “strong post-Christmas business.” Analysts had anticipated a 5.9% decline.

But the lackluster results at most discounters were a huge, negative surprise.  Costco Wholesale (COST) reported a 4% drop in same-store sales for December, a bigger decline than the 3.7% analysts had expected.

Target’s (TGT) December same-store sales fell by 4.1%. The retailer said this was in line with their expectations but that it had to slash prices to clear inventory.

“These markdowns, combined with additions to our accounts receivable allowance, will put additional pressure on our profitability in the fourth quarter,” the company said.

“This kind of discounting is a big concern,” Retail Metrics President Ken Perkins told Bloomberg TV. “January will be a heavy clearance month, with further downward margins pressure, and we might see more forecasts cut.”

It’s almost like Pavlov’s dog,” said Craig Johnson, president of retail-consulting firm Customer Growth Partners LLC in New Canaan, Connecticut.  “Consumers have become so accustomed to markdowns that nobody wants to pay full retail anymore.”

Source:Blue Christmas for Retailers as Slumping Economy Hammers Sales

• Kenya’s economy grew 2.1% in the third quarter, down significantly from the 6.3% gross domestic product growth it posted a year earlier. On top of the global financial crisis, Kenya suffered from post-election violence and a severe drought, Bloomberg reported.

• Caterpillar Inc. (CAT) said it will offer buyouts to some employees and cut white-collar pay by up to 50%. Last week, the heavy equipment maker announced plans to lay off 814 works at its engine assembly plant, Reuters reported.

• Wal-Mart Stores Inc. (WMT) has made a $2.66 billion offer for Chile’s biggest grocery chain, Distribucion y Servicio D&S SA (ADR:DYS). Wal-Mart’s outgoing international chief and soon-to-be CEO Mike Duke said in October that Chile’s economy is strong and growing, Bloomberg reported.

• As its quarterly profits missed estimates, drugstore operator Walgreen Co. (WAG) said it is cutting back on plans to open more stores. Profit fell to $408 million, or 41 cents a share, in its fiscal first quarter ended Nov. 30, Reuters reported.

• Palm, Inc. (PALM) yesterday (Monday) secured a much needed $100 million equity investment from Elevation Partners, a venture capital firm that includes Bono, lead singer for the rock band U2, BetaNews reported. Palm a maker of mobile electronic devices, will use the money to help launch a smartphone that will be compete with Apple’s 3G iPhone.

• UBS AG (UBS) will sell its Canadian energy operations and global agriculture business to JPMorgan Chase & Co. (JPM), Reuters reported. JPMorgan is buying Canadian Energy, UBS’ Canadian-based commodities energy business, as well as UBS’ London-based Global Agricultural Commodities business.

• Light, sweet crude for February delivery fell $2.45, nearly 6%, on the New York Mercantile Exchange yesterday (Monday) to settle at $39.91 a barrel. Crude prices have now fallen 70% from their July peak of $147.47 a barrel.

Source: Global Investing Roundups Tuesday, December 23rd, 2008

• The iShares MSCI Brazil Index (EWZ), an exchange-traded fund (ETF) that was the topic of the popular “Buy, Sell or Hold” feature a week ago Monday (Oct. 27), surged another 9.82% yesterday (Tuesday) and is now up 42% in the six days since Contributing Editor Horacio Marquez rated the ETF as a “Buy” in his column. The shares, which were recommended at $29.94, zoomed $3.81 each, or 9.82%, to close at $42.60, and have now gained $12.66 a share, or 42% since they were recommended by Marquez. They traded as high as $43.35 yesterday – an increase of 45% from their recommendation price.

• Magna International Inc. (MGA), the largest auto-parts maker in North America, reported a $215 million third-quarter loss and cut its quarterly dividend 50% to 18 cents. The dividend cut reflects the “reduction in profitability and uncertainty about the timing of an industry recovery in our traditional markets,” Magna said in a statement.

• U.S. factory orders in September fell three times more than forecast, Bloomberg reported, slumping 2.5% after a 4.3% drop in August. “There’s not a lot of hope on future orders and production,” Guy Lebas, chief economist at Janney Montgomery Scott LLC, told Bloomberg. “The economy was on the edge of a precipice, and the credit crisis gave it a shove. Manufacturing will weaken because of slowing exports.”

• October same-store sales at Walgreen Co. (WAG) rose 2% and pharmacy same-store sales rose 2.8%. As of Oct. 31, the company operated 6,544 drugstores, 600 more than it did a year ago, Reuters reported.

• Shares of Yahoo Inc. (YHOO) got an unexpected lift when brokerage firm Collins Stewart raised Yahoo’s shares from “hold to “buy.” Collins Stewart cited a possible search deal with Google Inc. (GOOG) or Microsoft Corp. (MSFT), and set a target for $18 share, Reuters reported.
• Oil prices jumped nearly 12% yesterday (Tuesday) as Saudi Arabia cut its crude exports.  Light, sweet crude rose $7.59, or 11.88%, to settle at $71.50 a barrel. Oil had previously fallen more than 55% since hitting a record high $147.27 a barrel in July.

• Archer Daniels Midland Co. (ADM) said yesterday (Tuesday) that its fiscal first-quarter earnings more than doubled. A food processor and ethanol producer, Archer Daniels Midland reported quarterly profit of $1.05 billion, or $1.63 per share, up from $441 million, or 68 cents per share, last year. Sales jumped 65% to $21.16 billion.

• After four consecutive quarters of declining profit, UBS AG (UBS) posted a net profit of $252 million (296 million Swiss francs) during the third quarter. The Swiss bank benefited from a tax credit of $776 million (913 million francs) and a revaluation of credit positions that resulted in a $1.88 billion (2.21 billion francs) gain on its books, The Associated Press reported.

• The Federal Communications Commission yesterday (Tuesday) approved Verizon Wireless’ (VZ) planned $28 billion purchase of Alltel Corp., The Associated Press reported. Verizon is paying $5.9 billion and assuming $22.2 billion of Alltel’s debt. Verizon also agreed to sell assets in 22 states.

Source: Global Investing Roundups Wednesday, November 5th, 2008

But the markets are still in turmoil, says Aaron Lehman in The Smart Profits Report. And the Fed is running out of options to save the system. But some stocks still offer investors great long-term potential returns.

Aaron is bullish on cellphone maker Nokia Corp (NYSE: NOK) and small biotech Enzo Biochem (NYSE:ENZ)…

The dramatic decline in the U.S. financial and housing markets was quite evident in early 2007, yet the Federal Reserve, Treasury Department, and investment bankers alike were all lulled into dangerous states of inactivity. Combined with the extraordinary rise in energy costs and commodity prices, these factors have taken a heavy negative impression toll on the economy.Here’s what you need to know – and which companies could combat the current situation best from here…

The Market’s 2008 Burden

Although the U.S. dollar has climbed against other major foreign currencies like the euro, British pound and Japanese yen over the past ten days, its overall devaluation hurts Americans traveling abroad, but helps U.S. exporters and foreigners traveling here to pick up bargains.

Still, the picture remains bleak, as we’ve witnessed the demise of Bear Stearns, billions of dollars in bank write-offs, the implosion of Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE), the continuation of the sub-prime mortgage debacle and resulting foreclosures as real estate prices sink.

At the same time, Americans’ spending power is rapidly eroding, as inflation continues to rise. So what can we do now to prepare for the future?

Invest More… Speculate Less

Although the next 6-12 months seems bleak (if you listen to a lot of the mainstream press anyway), I believe it will create significant investment opportunities for patient investors, who rely on facts, rather than following the panicking herd out the door.

Yes, while factors both here and abroad warrant caution (examples include the resurgence of Russia as an aggressive nation, a changing of the guard in Pakistan, nuclear tensions in Iran, an economic slowdown in Europe, and the U.S. presidential election), they certainly don’t signify financial ruin.

The difference between investors and speculators is knowledge. Yes, every investment is somewhat speculative, no matter how safe you think the asset may be. But a good analyst relies on a wide array of data in selecting a pick in order to give the best possible chance for success.

Those tools include monitoring industry trends, and thoroughly analyzing balance sheets, income statements, cash flow analysis and the history of that entity under various scenarios. Many go even further by interviewing management, competitors and customers.

You can then make a better judgment about when the asset should be bought or sold, plus the probability of success. It takes time – but it’s time well spent. And that’s exactly what we strive to do for you here and in our premium content newsletter, the Xcelerated Profits Report.

Don’t Bet On The Fed This Time

Don’t pin your hopes on the Federal Reserve. The bankers are virtually out of options that can save the system, short of bailing out every struggling financial institution or creating rampant inflation.

The fact is, the “good old days” are gone… the financial sector shakeout probably has further to go… and the value of underlying assets and the ability of the various institutions to raise capital is still uncertain.

In the absence of much leadership, I continue to remain skeptical about a sustained rally or the beginning of a new bull market. But there is hope.

Signs of a market bottom (which will be the first indication of full recovery) might include market capitulation, a shakeout of money managers, including hedge funds, and even greater negative sentiment.

Longer-term positives would include oil prices dropping closer to about $70 a barrel, a rally in the U.S. dollar to about $1.10-1.25 versus the euro, and a basing in the housing market, with stable housing starts and fewer foreclosures.

In the present, though, U.S. corporate balance sheets are quite strong, and stable share prices can create a major stimulus to cash flow and corporate profits.

Two More Stocks For Your Watchlist

In my last column, I mentioned two companies that might be within striking distance of a bottom – Walgreen Co. (NYSE: WAG) and Verizon Communications Inc. (NYSE: VZ). Since that time, Walgreen is up slightly and Verizon is down a bit. But both are still worth considering on pullbacks.

Today, you could take a look at Nokia Corp (NYSE: NOK) – the world’s largest cell phone manufacturer. It’s another large-cap company that provides a relative degree of safety and is dominant in its respective markets. Two of the most dominant include China and India, where the firm is still expanding.

Selling at less than 10 times next year’s earnings, the stock yields about 3.3% and has a strong balance sheet. Even if it approaches its 52-week high of $42.22, it would appreciate by nearly 70% excluding dividends. And that gives long-term investors a potential return of 30% per annum over a 24-month time horizon.

If you can take on more risk, check out Enzo Biochem (NYSE:ENZ) – a small biotechnology company that has made several acquisitions over the past year. Those purchases should enhance revenue growth and give the firm a strategic presence in its markets, while simultaneously giving it the ability to pursue its vast intellectual property

All told, Enzo Biochem has significant long-term opportunities and I’m confident that it will enhance its future prospects – especially with $75 million in cash and new management.

Source: How To Handle The Stock Market’s Current Turmoil

During the previous nine years, the benchmark Standard & Poor’s 500 Index has essentially traded flat, posting an annual decline of 0.37%. By contrast, during the same time frame, treasuries have climbed 4.7% per year and commodities and real estate have fared even better still. The Wall Street Journal referred to this period as “The Lost Decade” for stocks.

The message here: Don’t let “buy-and-hold” become “buy-and-forget.”

Employ the Money Morning investment strategy. Monitor your portfolios for rebalancing opportunities and achieve greater diversification by considering allocations to such non-traditional asset classes like commodities and real estate. And most important of all, capitalize on the faster growth of the global markets.

Market Matters

Financial stocks were again the headline-makers of the week [What else is new?], as shares of The Bear Stearns Cos. (BSC) rebounded a bit when JPMorgan Chase & Co. (JPM) upped its offer for the company by fivefold.  Don’t think other institutions are ignorant of the U.S. Federal Reserve’s recent “creative” moves [most folks would refer to them as "bailouts"]. Indeed, quite a few financial-services firms are probably in the hunt for a bargain-basement buyout of their own. Wells Fargo & Co. (WFC) Chief Executive Officer John G. Stumpf was honest enough to say said that he “would not be averse to a Fed-assisted transaction… fixer-uppers don’t bother us.”

Even the Bush administration set aside its long-standing policy of “less government” for the time being as U.S. Treasury Secretary Henry Paulson admitted that the investment community would benefit from more regulation and greater oversight

Analysts took turns dissecting each other this week as Lehman Brothers Holdings Inc. (LEH) reduced estimates on Citigroup Inc. (C) and Bank of America Corp. (BAC); Oppenheimer Holdings Inc. (OPY) cut earnings forecasts on Merrill Lynch & Co. Inc. (MER); and Citi increased its rating on Lehman after that company’s shares plunged on rumors of ongoing, Bear Stearns-like challenges. Of course, Lehman claims short-sellers were behind the nonsensical talk as they looked to profit from the wild price swings.

Outside the financial sector, news from the retail sector was mixed last week as Tiffany & Co. (TIF) boosted its earnings guidance for the year and Walgreen Co. (WAG) reported stronger-than-expected second-quarter earnings. On a sour note, J.C. Penney Co. Inc. (JCP) lowered its expectations for future sales and profitability as the economy has hindered consumer activity. Techs suffered some disturbing news last week, as Oracle Inc. (ORCL) announced disappointing sales numbers and Google Inc. (GOOG) said that its “paid click data” was lower than anticipated for the second month in a row.  The jury is still out on the proposed $19 billion Clear Channel Communications Inc. (CCU) privatization transaction, as banks and private-equity firms haggle over funding terms.

Oil prices rose again last week as lower inventory levels brought renewed fears that the dwindling supply would be not keep up with summer demand.  Additionally, an attack on a key pipeline in Iraq added more “fuel to the fire.”

Then again, a slowing economy and oil at better than $105 a barrel should serve to dampen demand. Investors welcomed word of the new-and-improved JPMorgan/Bear Stearns deal, but were disappointed by the continued sluggish economic data and the pessimistic announcements by a few tech giants.  So despite the market volatility, certain investors were again treading water as some major equity indexes ended the week not far from where they opened.

Has anyone acquired the copyrights on “The Lost Decade” yet? We think it would make for some wickedly cool T-shirts…

Weekly Economic Calendar

Economically Speaking

So maybe a celebratory parade in honor of the February existing home sales data [best showing in a year] was a bit premature? While some analysts began proclaiming the “beginning of the end” of the housing slowdown, a few new releases dampened their moods considerably as the week progressed.

A related report showed that new home sales in February dropped to the lowest level in 13 years. Further, the S&P/Case-Shiller index depicted the worst decline in home prices since 1987 [when the index was created].  Likewise, the manufacturing sector took a hit last week as durable goods orders surprised analysts by falling much more than expected, while consumers remained in hibernation with the Consumer Confidence Index suffering its poorest showing in five years.

The final reading of fourth-quarter 2007 gross domestic product (GDP) confirmed earlier reports of extremely feeble (+0.6%) economic growth – though many analysts believe the current quarter will prove to be even worse. With all the talk about recession, many are predicting negative growth for this year’s first quarter – and possibly beyond.

Bear in mind, none of the current numbers reflect any of the recent creative moves the Fed has initiated over the past few weeks in an attempt to jump-start the economy [or at least to prevent additional carnage in the U.S. financial sector]. If U.S. Federal Reserve Chairman Ben S. Bernanke can work some magic, the downturn [dare we say recession?] will be short-lived, and that celebratory parade will be in order soon.

By William Patalon III
Executive Editor
Money Morning/Money Map Report