Category: Articles

Has anyone else noticed the downgrade list far outnumbers the upgrades list recently?

UPGRADES

Occulogix OCCX Caris & Company Average » Above Average
BRE Properties BRE Credit Suisse Neutral » Outperform $50 » $65
Pharmacopeia PCOP CIBC Wrld Mkts Sector Perform » Sector Outperform
Norfolk Southern NSC Lehman Brothers Underweight » Equal-weight
Celestica CLS JP Morgan Underweight » Neutral
SL Green Rlty SLG Stifel Nicolaus Hold » Buy

DOWNGRADES

Saul Centers BFS Ferris Baker Watts Buy » Neutral
United Tech UTX KeyBanc Capital Mkts Buy » Hold
Robbins & Myers RBN KeyBanc Capital Mkts Aggressive Buy » Hold
Regal-Beloit RBC KeyBanc Capital Mkts Aggressive Buy » Buy
Goodman Global GGL KeyBanc Capital Mkts Aggressive Buy » Hold
Mission West MSW Stifel Nicolaus Buy » Hold
Altair Nanotechnologies ALTI Merriman Curhan Ford Buy » Neutral
Edge Petroleum EPEX BMO Capital Markets Market Perform » Underperform
Molson Coors Brewing TAP UBS Buy » Neutral
Perini PCR Morgan Joseph Buy » Hold
Corel CREL CIBC Wrld Mkts Sector Outperform » Sector Perform $18.50 » $16
Expeditors Intl EXPD UBS Buy » Neutral
SanDisk SNDK Oppenheimer Buy » Neutral
Abbott Labs ABT Wachovia Outperform » Mkt Perform
CSX Corp CSX Lehman Brothers Equal-weight » Underweight
Burl Nrth Santa Fe BNI Lehman Brothers Overweight » Equal-weight
Xyratex XRTX Citigroup Buy » Hold
AXA AXA Deutsche Securities Buy » Hold
TTM Tech TTMI JP Morgan Overweight » Neutral
ValueClick VCLK Citigroup Buy » Hold
Nuance Communications NUAN Citigroup Buy » Hold
NASDAQ NDAQ Piper Jaffray Outperform » Market Perform
FirstFed Financial FED Friedman Billings Outperform » Mkt Perform

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FRIDAY’S PICKS

Jeff Macke recommended buying UltraShort QQQ ProShares (QID). Open $37.08

Guy Adami preferred Short Dow30 ProShares (DOG). Open $56.40

Karen Finerman told the panel to short Baidu.com (BIDU). Open $308.78

Pete Najarian thought EMC Corp. (EMC) is a buy. Open $22.75

THURSDAY’S RESULTS

Jon Najarian liked Google (GOOG).Open $625.39 Close $622 LOSS

Jeff Macke recommended Merck (MRK).Open $53.23 Close $53.04 LOSS

Tim Seymour preferred ConocoPhillips (COP).Open $86.73 Close $85.72 LOSS

Karen Finerman said Tyco Electronics (TEL) is a buy.Open $36.84 Close $36.65 LOSS

Pete Najarian likeed ValueClick (VCLK). Open $29.32 Close $27.59 LOSS

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks

Guy Adami= 29-19 = 59%
Eric Bolling= 10-11 = 48%
John Najarian= 13-4 = 76%
Jeff Macke= 36-27 = 54%
Pete Najarian= 23-21 = 52%
Tim Seymore= 4-3 = 57%
Karen Finerman= 14-9 = 60%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%

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Discretionary income names are getting hammered..

USAK USA Truck Inc 14.50
UMC United Microelectroni … 4.02
TXRH Texas Roadhouse Inc 10.95
SMRT Stein Mart Inc 7.37
SHRP Sharper Image Corporation 3.30
SCSS Select Comfort Corp 13.74
RUTH Ruths Chris Steak Hse Inc 13.93
RT Ruby Tuesday, Inc. (G … 16.03
PLCM Polycom Inc 24.18
MWY Midway Games Inc 3.85
MSSR Mccormick & Schmicks … 18.01
MFB Maidenform Brands Inc 14.88
CRFT Craftmade Internation … 10.70
COLM Columbia Sportswear Co 51.05
CNTY Century Casinos Inc 5.78
CMRG Casual Male Retail Gr … 8.31
BGG Briggs & Stratton Cor … 24.20
BGFV Big 5 Sporting Goods Corp 18.18

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I was going to post on what Hillary said on CNBC about healthcare but she didn’t say anything coherent or specific. Just more ambigous soundbites. “My plan takes what works and gets rid of what doesn’t and is fiscally sound”. Easy does it Hill, too many details. Another detail ridden bite “My plan will lower premiums and increase coverage”…. uhhhh.. How? she must have said 10 times “Under my husband… then transitioned to “under President Bush”… Uh… Who is running Hill? How about running on your record?

By the way, in case you did not know it, according to Hill we are on the precipice of economic ruin…

Interesting note… when she was CNBC the S&P dropped almost 10 points, coincidence?

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Fight Foreclosure, Adam’s links, Crime, Sleep

– Here are four ways you can fend off foreclosure of your home

– Adam Warner has his blog report out again

– The link to child abuse and crime.

– Lack of sleep can be just as damaging as lead poisoning in children

It does make sense. If money is indeed tight for people, where else are they going to shop?

On a day that Target (TGT), JC Penny (JCP) and Nordstrom (JWN) reduced guidance, Wal-Mart (WMT) released sales results today:

5 Weeks Ending 10.6.2007

Wal-Mart = +6.4%
Sam’s Club = +6.8%
International= +20.1%

35 Weeks Ending 10/5

Wal-Mart= +6.3%
Sam’s Club= +7.0%
International= +16.7%

Wal-Mart Stores:
For the September five-week period, comparable store sales at the Wal-Mart Stores segment were driven by grocery and pharmacy. The Company marked the anniversary of its $4 generic prescription program with a national expansion of additional medications available for treating even more conditions.

Overall, apparel and home remain soft. Company research reinforces that customers remain concerned about their finances, especially the cost of living. Within this environment, Wal-Mart Stores continues to reinforce its price leadership message, and during September launched its national brand advertising campaign with the new tagline “Save money. Live better.”

Sam’s Club:
Sales for the five-week period were driven by increases in average ticket for both business and Advantage members, with small business member sales growth continuing to lead. Sales strengths for the month included fresh food, grocery, electronics and video games. As October progresses, the clubs are transitioning into holiday entertaining in food and general merchandise.

International
During the September period, the United Kingdom, Brazil and China continued their recent positive performance. Sales throughout Brazil continue to be driven by a stronger price position, assortment that is customized to the local community and a recovery of disposable income. Macroeconomic factors continued to contribute to a slowdown in sales in Mexico.

Wal-Mart then raised earnings guidance for Q3 6% from the previously stated guidance of $0.62 to $0.65 to a range of $0.66 to $0.69. Nothing wrong with that. What pleases me most is the continued surge in growth in the international division. International operations now make up 25.8% of sales vs 23.5% in 2006. I have stressed my feelings on the potential here both in China and in India and this growth underscores my point. This is where money needs to be spent.

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The notes from the last Fed meeting were released today and for those looking for more rate cuts, a reading of them must make you smile.

Here are the key decision making variables for the meeting and the conclusion and outlook drawn form them. You can read the whole release here

CREDIT MARKETS:

“In their discussion of the economic situation and outlook, meeting participants focused on the potential for recent credit market developments to restrain aggregate demand in coming quarters. The disruptions to the market for nonconforming mortgages were likely to reduce further the demand for housing, and recent financial developments could well lead to a more general tightening of credit availability. Moreover, some recent data and anecdotal information pointed to a possible nascent slowdown in the pace of expansion. Given the unusual nature of the current financial shock, participants regarded the outlook for economic activity as characterized by particularly high uncertainty, with the risks to growth skewed to the downside. Some participants cited concerns that a weaker economy could lead to a further tightening of financial conditions, which in turn could reinforce the economic slowdown. But participants also noted that the resilience of the economy in the face of a number of previous periods of financial market disruptions left open the possibility that the macroeconomic effects of the financial market turbulence would prove limited.

Although financial markets were expected to stabilize over time, participants judged that credit markets were likely to restrain economic growth in the period ahead. Given existing commitments to customers and the increased resistance of investors to purchasing some securitized products, banks might need to take a large volume of assets onto their balance sheets over coming weeks, including leveraged loans, asset-backed commercial paper, and some types of mortgages. Banks’ concerns about the implications of rapid growth in their balance sheets for their capital ratios and for their liquidity, as well as the recent deterioration in various term funding markets, might well lead banks to tighten the availability of credit to households and firms. Tighter credit conditions were likely to weigh particularly on residential investment and to a lesser extent on other components of aggregate demand in coming quarters. Meeting participants also noted that financial market conditions, while seeming to have improved somewhat in the most recent days, were still fragile and that further adverse credit market developments could well increase the downside risks to the economy. Even after market volatility subsided and the recent strains eased, risk spreads probably would be wider and credit terms tighter than they had been a few months ago. Although these developments would likely be consistent with longer-term financial stability, they were likely to exert some restraint on aggregate demand.”

INFLATION:

“Participants made only modest revisions to their outlook for inflation in the period since the Committee’s last regular meeting. Still, they recognized that incoming data on core inflation continued to be favorable, and they generally were a little more confident that the decline in inflation earlier this year would be sustained. Inflation expectations seemed to be contained, and the less robust economic outlook implied somewhat less pressure on resources going forward.”

OUTLOOK:

“The Committee agreed that the statement to be released after the meeting should indicate that the outlook for economic growth had shifted appreciably since the Committee’s last regular meeting but that the 50 basis point easing in policy should help to promote moderate growth over time. They also agreed that the inflation situation seemed to have improved slightly and judged that it was no longer appropriate to indicate that a sustained moderation in inflation pressures had yet to be shown. Nonetheless, all agreed that some inflation risks remained and that the statement should indicate that the Committee would continue to monitor inflation developments carefully. Given the heightened uncertainty about the economic outlook, the Committee decided to refrain from providing an explicit assessment of the balance of risks, as such a characterization could give the mistaken impression that the Committee was more certain about the economic outlook than was in fact the case. Future actions would depend on how economic prospects were affected by evolving market developments and by other factors.”

It is clear that the committee is concerned about growth going forward but their inflation fear seem to have ebbed considerably. That being said, it leave Bernanke & Co. now have total flexibility to react to events as they see fit free of the inflation handcuffs they wore in the spring and into the early summer.

If the economy seem to continue it’s slide in October, count on another cut but if it shows signs of stabilizing, the Fed will most likely tight for a meeting before acting again…

In July Citi (C) reported net income for Q2 of $6.23 billion, or $1.24 per share, both up 18%. International revenues and net income were a record, up 34% and 35%, respectively and ROE was 20.1%.

Charles Prince, Citi Chairman and Chief Executive Officer said at the time,”We have very clear priorities to drive growth and we are executing on all of them. We generated record revenues, up 20%, and record earnings from continuing operations, up 18%, both driven by our record international results,”.

He continued: “We continued to generate revenue and volume growth in our U.S. consumer franchise, while making excellent progress in re-weighting Citi toward our other businesses, especially our international franchises, where revenues and net income increased over 30%. Our capital markets-driven businesses performed extremely well and international consumer revenues and volumes grew at a double-digit pace.”

“We made excellent progress in expanding our business through targeted acquisitions, completing three international transactions, including an increase in our ownership of Nikko Cordial Corporation in Japan to 68%.”

Revenue increases were led by 34% growth in international revenues. International markets & banking revenues grew 50%, international consumer revenues increased 16%, and wealth management revenues more than doubled.

Fast forward to earlier this month. Citi, which currently gets 40% of earnings from international operations came out and warned the credit market disruptions will effect earnings by about 60% in Q3. They joined the parade of institutions (Merrill (MER), Lehman (LEH), Morgan Stanley (MS), Washington Mutual (WM) and Bear Sterns (BSC)to name just a few) writing down the values of mortgage based assets.

Here is what is happening. The banks are using this situation to “come clean”. They are going to jam all the bad news and write-downs into this quarter. This means that the return to normalcy in the credit markets and asset reduction overkill in Q3 can’t help but make Q4 a very strong quarter.

Expect this to be very dismal, about 43 cents from last years $1.06 a share. That being said, the only thing that matters here is Q4’s outlook. All the bad news has been let out so there should not be any more skeletons in the closet (if there are, heads will roll). Another item worth watching is the percentage of income from international operations. If the US does slow down a bit, this segment should be able to take up the slack.

CEO Prince has promise a “strong Q4”. He has to deliver in order to keep his job.

THURSDAY’S PICKS

Jon Najarian liked Google (GOOG).Open $625.39

Jeff Macke recommended Merck (MRK).Open $53.23

Tim Seymour preferred ConocoPhillips (COP).Open $86.73

Karen Finerman said Tyco Electronics (TEL) is a buy.Open $36.84

Pete Najarian likeed ValueClick (VCLK). Open $29.32

WEDNESDAY’S RESULTS

Jeff Macke liked Johnson & Johnson (JNJ). Open $66.25 Close $65.83 LOSs

Carter Worth recommended shorting Black & Decker (BDK). Open $82.64 Close $82.08 LOSS

Pete Najarian said Cypress (CY) is a buy. Open $30.91 Close $30.86 LOSS

Ned Riley, The CEO of Riley Asset Management said his pick is Power Shares QQQ Trust (QQQQ). Open $53.38 Close $53.51 GAIN

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks

Guy Adami= 29-19 = 59%
Eric Bolling= 10-11 = 48%
John Najarian= 13-3 = 81%
Jeff Macke= 36-26 = 56%
Pete Najarian= 23-20 = 51%
Tim Seymore= 4-2 = 66%
Karen Finerman= 14-8 = 63%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%

OXM Oxford Industries, Inc 27.37
OLCB Ohio Legacy Corp 8.00
NUHC Nu Horizons Electroni … 8.12
NOVN Noven Pharmaceuticals Inc 12.78
DWRI Design Within Reach Inc 4.60
DRAM Dataram Corporation 3.22
CSCD Cascade Microtech Inc 8.83
COLM Columbia Sportswear Co 52.01
CMRG Casual Male Retail Gr … 8.56
CALC California Coastal Cm … 11.26

Auto’s, Homebuilders, Google Phone, Angry Former Apple Fans

– Here is an interesting argument about the auto industry

– Thinking of investing in homebuilders?

– More info on a Google Phone

– More rage on the degeneration of Apple into what it once mocked.

UPGRADES

Massey Energy MEE Stifel Nicolaus Hold » Buy
Cyberonics CYBX Collins Stewart Market Perform » Buy
Spectrum Pharma SPPI Brean Murray Hold » Buy
Century Casinos CNTY Brean Murray Hold » Buy
Winnebago Inds WGO RBC Capital Mkts Sector Perform » Outperform
CyberSource CYBS JMP Securities Mkt Perform » Mkt Outperform

DOWNGRADES

China Mobile CHL Deutsche Securities Buy » Hold
Microchip MCHP AmTech Research Buy » Neutral
U.S. Xpress XPRSA Stifel Nicolaus Buy » Hold
Universal Truckload Services UACL Stifel Nicolaus Buy » Hold
Sprint Nextel S Stifel Nicolaus Hold » Sell
Aon AOC Stifel Nicolaus Buy » Hold
Lihir Gold LIHR HSBC Securities Neutral » Underweight
State Auto Fin STFC KeyBanc Capital Mkts Buy » Hold
Ntelos Holdings NTLS UBS Buy » Neutral
Elizabeth Arden RDEN Sun Trust Rbsn Humphrey Buy » Neutral
Business Objects BOBJ Jefferies & Co Buy » Hold
Cognos COGN Jefferies & Co Buy » Hold
Cooper Cos COO JP Morgan Neutral » Underweight
DRDGOLD DROOY HSBC Securities Neutral » Underweight
Meridian Gold MDG HSBC Securities Overweight » Neutral
Kinross Gold KGC HSBC Securities Overweight » Neutral
Harmony Gold HMY HSBC Securities Overweight » Neutral
Royal Gold RGLD HSBC Securities Overweight » Neutral
Randgold Resources GOLD HSBC Securities Overweight » Neutral
Goldcorp GG HSBC Securities Neutral » Underweight
Buenaventura SA BVN HSBC Securities Overweight » Underweight
F5 Networks FFIV RBC Capital Mkts Outperform » Sector Perform
Business Objects BOBJ UBS Buy » Neutral
Wimm-Bill-Dann Foods WBD Citigroup Buy » Hold
Health Care REIT HCN UBS Buy » Neutral
Nationwide Health NHP UBS Buy » Neutral
Ventas VTR UBS Buy » Neutral