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Friday’s Upgrades / Downgrades

UPGRADES

FTD Group FTD Matrix Research Buy » Strong Buy
Unilever PLC UL Lehman Brothers Underweight » Equal-weight
Gateway GTW Citigroup Sell » Hold
MeadWestvaco MWV Credit Suisse Neutral » Outperform
Prudential PRU Credit Suisse Neutral » Outperform
Merck MRK Banc of America Sec Neutral » Buy
Thornburg Mortg TMA Piper Jaffray Underperform » Market Perform
Infineon IFX Lehman Brothers Equal-weight » Overweight
Thornburg Mortg TMA Deutsche Securities Sell » Hold

DOWNGRADES

Syntax-Brillian BRLC Canaccord Adams Buy » Hold
American Community Bancshares ACBA Stifel Nicolaus Buy » Hold
Syntax-Brillian BRLC Collins Stewart Buy » Market Perform
STMicroelectronics STM Lehman Brothers Overweight » Underweight
PepsiAmericas PAS HSBC Securities Neutral » Underweight
Buckeye Tech BKI Citigroup Buy » Hold
Biogen Idec BIIB UBS Neutral » Sell

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"Fast Money" for Friday

FRIDAY’S PICKS

Jeff Macke recommended shorting General Motors (GM). Open $33.29

Guy Adami said buy the Short Dow30 ETF (DOG). Open 59.46

Karen Finerman said buy ConocoPhillips (COP). Open $85.11

Pete Najarian liked Sun Microsystems (JAVA) Open $5.80


THURSDAY’S RESULTS

Jeff Macke recommended Short Dow30 ProShares (DOG) as a bet against The Dow. Open $59.92 Close $59.46 Loss $.46

Guy Adami likes Zimmer Holdings (ZMH). Open $81.02 Close $82.49 Gain $1.47

Karen Finerman prefers Johnson & Johnson (JNJ). Open $62.51 Close $63.11 Gain $.60

Pete Najarian says St. Jude Medical (STJ) is a buy. Open $46.83 Close $45.94 Loss $.89

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks)

Guy Adami= 22-15 Gain $40.01
Eric Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Jeff Macke= 26-20 Gain $7.78
Pete Najarian= 15-13 Gain $22.46
Tim Seymore= 3-2 Loss $.49
Karen Finerman= 8-3 Gain $4.54
Stacey Briere-Gilbert= 2-0 Gain $1.61

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Thursday’s 52 Week lows

WMAR West Marine Inc 11.35
WCC Wesco Intl Inc 41.75
SEH Spartech Corporation 17.51
SEED Origin Agritech Limited 6.76
RYL The Ryland Group, Inc 24.31
RT Ruby Tuesday, Inc. (G … 20.44
NT Nortel Networks Corp New 16.45
LCRY LeCroy Corporation 7.10
LANC Lancaster Colony Corp … 36.59
LAB Labranche & Co Inc 4.62
KKD Krispy Kreme Doughnut … 3.10
HOG Harley-Davidson, Inc 46.77
DF Dean Foods Co New 25.32
ALU Alcatel-Lucent 9.16

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Thursday’s Links To Visit

– Absolutely, no free rides

– Goldman goes bargain hunting

– Very Interesting take on YouTube’s impact on Google

– More folks who see through the fog out there

Like I said

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The Greenspan Myth: A Must Read By Luskin

Please read Donald Luskin’s op-ed here. For those who do wish to leave, it is reprinted below.

“What would the Maestro do?”; As nervous markets hang on every word of Federal Reserve Chairman Ben Bernanke, trying to divine whether he will lower interest rates in response to the current turmoil in credit markets, comparisons to his illustrious predecessor Alan Greenspan are inevitable.

Such comparisons can also be invidious, and shouldn’t influence what Mr. Bernanke does now. Mr. Greenspan is fondly remembered for his role in stewarding markets through the stock crash of 1987, the Long Term Capital Management crisis of 1998, the collapse of the tech bubble in early 2001, and the aftermath of the terrorist attacks of September 2001. Today he enjoys a reputation for having moved swiftly and decisively — "pre-emptively" it is often said now — to help the markets out of those crises.

But the truth is quite different. Mr. Greenspan is fortunate indeed to be remembered as such a decisive leader, because in fact his reactions to some of those crises were quite tardy, and were seen by most market participants at the time as being too little, too late.

Let’s look at the Long Term Capital Management crisis of 1998, an event in many ways analogous to today’s situation. Then the markets were thrown into turmoil by emerging market currency devaluations and Russia’s default on its sovereign debt, much as markets have recently been rocked by defaults in subprime mortgages. As a consequence, then as now, the solvency of hedge funds and the investment banks that sponsored them were threatened.

By the time LTCM had collapsed — and had to be bailed out by a private consortium of banks brought together by the New York Fed’s William McDonough, not Mr. Greenspan — the S&P 500 had already fallen by almost 20%, and staged a modest recovery from there. Mr. Greenspan had done precisely nothing with interest rates.

The Federal Open Market Committee made a 25 basis-point rate cut the day after the LTCM bailout was announced in late September. Markets were not impressed. Credit markets remained frozen much as they have been in the current crisis, and stocks fell to new lows over the first 10 days of October.

Laurence Meyer, a Federal Reserve Board governor at the time, recalls in his 2004 book, A Term at the Fed, that "Rather than calming the markets, the small size of the rate cut raised doubts that the Fed appreciated the severity of the problem . . . Greenspan was now under attack."

In mid-October, Mr. Greenspan cut rates another 25 basis points in a surprise inter-meeting move. According to Bob Woodward in his Greenspan biography Maestro, Mr. Greenspan was reluctant to make that move but was pressured by Mr. McDonough and then Fed Vice Chairman Alice Rivlin.

By the end of 1998 there was another 25 basis-point cut at a regular FOMC meeting, the market turmoil passed and Mr. Greenspan ended up on the cover of Time as chairman of the "Committee to Save the World." That’s how he’s remembered today.

Mr. Greenspan is also remembered for cutting interest rates aggressively as the tech bubble burst in early 2001, starting on Jan. 3 with a surprise inter-meeting cut of 50 basis points. In his book, Mr. Meyer writes that Mr. Greenspan "had decided that the Fed should be seen making a deliberately anticipatory move — one that would not be viewed as a late response to a rapidly deteriorating situation."

Alan Greenspan got his wish in terms of how history would remember him, but the reality is that the economy had already rolled over. By the time Mr. Greenspan made his "anticipatory" cut, the S&P 500 had already fallen almost 16% from its highs the previous September.

And when the cut was announced, the relief in the markets was fleeting. Stocks stabilized for several weeks, but fell to new lows in mid-February. They were destined to fall nearly an additional 40% from there, despite no less than 11 more rate cuts — with even more to come after stocks bottomed in late 2002. So much for "anticipatory."

Mr. Greenspan indeed did cut rates quickly in the aftermath of the stock crash of 1987 and the terrorist attacks of September 2001. That’s because both those extraordinary and highly public events were seen by the Fed as being very likely to depress overall economic activity, not because distressed markets themselves needed to be bailed out.

To help the markets in those crises, the Fed opened its checkbook to provide the liquidity necessary for transactions to clear and credit to endure despite the chaos. That’s precisely what Mr. Bernanke has already done in the present turmoil, both through a very high volume of ordinary open market transactions and a liberalized discount-window lending policy.

In that sense, Mr. Bernanke has already acted more pre-emptively than Mr. Greenspan did in 1998, and similarly to the way Mr. Greenspan did in 1987 and September 2001. And he has done so despite the fact that, judging by the stock market’s sturdy performance through the current turmoil — now down only about 5% from all-time highs — today’s crisis is less threatening than those earlier ones.

It’s noteworthy that the enormous volume of Fed open-market operations in the fed funds markets over the last month has been completed at the current rate target of 5.25%. This suggests that no lower rate is required to meet the needs of the banking system. And the discount window has scarcely been used at all, which suggests that the system is not in quite the state of distress that has been advertised.

So why would Mr. Bernanke cut the fed funds rate, unless he became convinced that the overall economy was highly likely to be damaged by the present market turmoil? That was the call Mr. Greenspan made quickly after the 1987 crash and the 2001 attacks, and slowly in 1998 and early 2001. Where’s the evidence to support Mr. Bernanke making such a call today? Almost all the evidence is that the economy is remarkably robust, credit crisis or no credit crisis, housing slowdown or no housing slowdown.

Yes, we’ve had one disappointing jobs report. But with jobs at a level historically regarded as "full employment," must we hurry to cut rates? By historical standards, rates are already low. Since the 1970s, no easing cycle, and no recession, has ever begun when the real funds rate was as low as it is today.

Yet Mr. Bernanke remains under tremendous pressure from markets to cut rates. The prices observed in short-term fixed-income and interest-rate futures markets clearly imply that the markets expect a cut — and the balance of pundit commentary is calling for one.

If the principled case can be made that a robust economy is significantly at risk, then Mr. Bernanke should do what the markets and the pundits demand — provided that he sees a rate cut as consistent with his mission to preserve price stability.

But the idea that he must act immediately, in order to be seen as a worthy successor to the "Maestro," is unfair to Mr. Bernanke and too generous to Mr. Greenspan. The current Fed chief deserves our admiration for having acted quickly and appropriately so far, and resisted the temptation to over-react.

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Citi Working On A Big Deal?

Last December, CITI (C) CEO Charles Prince admitted his frustration with the lack of movement in the bank’s share price and defended his strategy of organic growth and targeted international acquisitions. Public dissatisfaction from shareholders including the bank’s largest investor, Saudi Arabia’s Prince Alwaleed bin Talal, to improve the bank’s performance had many speculating Prince would soon be “free to pursue other opportunities”.

In July, Citi created unit to search the market for potential targets after striking several deals in Europe and elsewhere in recent months to reduce its dependence on the US consumer business.

In the past year Citi acquired UK internet bank Egg and investment manager Quilter, as well as a 20% stake in Turkey’s Akbank. Outside the UK, Citi acquired Old Lane, the US hedge fund run by former Morgan Stanley banker Vikram Pandit, and Nikko Cordial, the Japanese brokerage.

Now word comes that Lewis Kaden, former vice-chairman and chief administrative officer at Citi, has been given a new role to “work closely” with Prince on strategic opportunities as the bank steps up its focus in this area. Kaden joined Citi in 2005 from law firm Davis Polk & Wardwell, where he was a partner whose practice included corporate governance and mergers and acquisitions.

Rumors are that Citi is working on larger international deals and the Kaden move only gives more validity to them. This would be the time to get deals done. Valuations of financial firms of all types have been decimated the past month and a half and valuations are ripe for deals in all sectors of the industry as witnessed by Bank of America’s (BAC) investment in Countrywide (CFC).

Citi’s share price has been stagnant for over a year now and Prince needs to do something soon or he will be “free” so to speak. He is on borrowed time.

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Dell: Still Treating Me Like The New Guy In The Cell Block

Ok, I am a sucker I admit it. I thought Dell (DELL) finally got it together, what a chump.

When we left off yesterday, Dell was going to tell DHL they could actually deliver the computer they had to me. Easy, right? Nope. If you are not familiar with the saga to date, begin here.

DHL, who has been excellent by the way called us this afternoon and said that Dell still has not sent them the authorization to deliver the computers. This is after the sales rep, a supervisor, and two customer service reps promised they would. so guess what we did today. PICKED IT UP OURSELVES!!!!

Not only that, the supervisor also promised me an email regarding the printer they were sending me to make up for this fiasco. Does anyone want to make a guess whether or not I received the email? Anyone?

You got it, nothing!! What is the problem Dell? I am only asking you to do what you promised me to do. Why is that so difficult? I just do not understand. Can anyone else explain it to me? Is this just the way it is done? I doubt it…

I have to contrast this to DHL in this scenario that has called us constantly and kept us in the loop in this situation. Here is the kicker, even they have been asking Dell to send them an email to give them the written authorization they need to deliver. Nothing…

Is there any good news in all of this? I guess we finally got the computer? I am trying to make lemonade out of lemons here gang.

Hewlett Packard (HPQ) should by happy though, they got a new customer…

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Wal-Mart’s Cutback Curious

Lost in the chatter about the recent Wal-Mart (WMT) announcement that August sales results exceeded its forecast as well as those of most analysts was that they now aim to spend less than the $15.5 billion it put aside for this year’s capital spending on building and expanding stores.

In June, Wal-Mart cut the capex forecast to $15.5 billion from $17 billion as it slashed by about 1/3 the number of stores it expects to add this year. Investors had pressured Wal-Mart to cut back on its relentless expansion in favor of bolstering the performance of its existing stores, buying back stock and increasing the dividend.

There is the albeit very brief backround. Why is this interesting? Recent rumors have had Wal-Mart possibly shopping for acquisitions in the US. By further cutting the current capex plans, this may be a move to retain cash for an upcoming purchase of another retailer either in the food or clothing arena. Last month I posted a few thoughts on the subject.

Also, Wal-Mart has committed to a $15 billion share repurchase program and the last quarter completed roughly $1 billion of that neither thrilling or disappointing investors. With the stock at near decade lows, the company may be cutting spending in order to purchase shares by the truckload at these prices to “thrill” the same investors at the next earnings release.

Now, what would we rather have? For me the best scenario here would be further cutting of the capex plans and a bunch more of the repurchase plans. There are few targets out there that Wal-Mart could not easily swallow should they desire, the question is will they? I am inclined to think not. If I had to bet (and being a recent shareholder I guess I am), I would wager that Wal-Mart is buying every share it can get it’s hands on at these prices and to be honest, I am fine with that. After the last earnings release I lamented that Wal-Mart had the cash to buy more shares and did not, turning what could have been a great release into a bit of a disappointment.

My guess is they will not make the same mistake twice…

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Thursday’s Upgrades / Downgrades

UPGRADES

Flow FLOW Northland Securities Market Perform » Outperform
EMC Corp EMC Caris & Company Above Average » Buy
Dionex DNEX Matrix Research Sell » Hold
Synovus SNV Bernstein Mkt Perform » Outperform
Adolor ADLR Brean Murray Sell » Hold
Cognizant Tech CTSH Bernstein Mkt Perform » Outperform
GSI Commerce GSIC Jefferies & Co Hold » Buy
Skechers USA SKX BB&T Capital Mkts Hold » Buy
Gentiva Health Svcs GTIV BB&T Capital Mkts Hold » Buy

DOWNGRADES

Investors Bancorp ISBC Janney Mntgmy Scott Buy » Neutral
Smith Intl SII CapitalOne southcoast Buy » Hold
Macrovision MVSN Jefferies & Co Buy » Hold
Industrias Bachoco SA IBA Citigroup Buy » Hold
Agnico-Eagle Mines AEM UBS Buy » Neutral
Wimm-Bill-Dann Foods WBD UBS Buy » Sell

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"Fast Money" For Thursday


THURSDAY’S PICKS

Jeff Macke recommended Short Dow30 ProShares (DOG) as a bet against The Dow. Open $59.92

Guy Adami likes Zimmer Holdings (ZMH). Open $81.02

Karen Finerman prefers Johnson & Johnson (JNJ). Open $62.51

Pete Najarian says St. Jude Medical (STJ) is a buy. Open $46.83


WEDNESDAY RESULTS

Jeff Macke recommended buying Dick’s Sporting Goods (DKS) (Open $66.80,Close $67.74 Gain $1.94) and Under Armour (UA). Open $62.17 Close $63.83 Gain $1.66

Guy Adami preferred GlaxoSmithKline (GSK). Open $54.01 Close $53.72 Loss $.29

Karen Finerman thought American Standard (ASD) is good. Open $35.20 Close $35.74 Gain $.54

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks)

Guy Adami= 21-15 Gain $38.54
Eric Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Jeff Macke= 26-19 Gain $8.24
Pete Najarian= 15-12 Gain $23.43
Tim Seymore= 3-2 Loss $.49
Karen Finerman= 7-3 Gain $3.94
Stacey Briere-Gilbert= 2-0 Gain $1.61

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Wednesday’s 52 Week Low’s

SHOO Steven Madden Ltd 20.09
SEH Spartech Corporation 17.88
SEED Origin Agritech Limited 7.10
RYL The Ryland Group, Inc 24.71
RVI Retail Ventures Inc 10.16
RT Ruby Tuesday, Inc. (G … 20.51
RSTO Restoration Hardware … 2.87
PLCE Childrens Pl Retail S … 25.55
PGR The Progressive Corpo … 19.40
PFCB P F Changs China Bist … 31.47
PEIX Pacific Ethanol Inc 11.10
OCR Omnicare, Inc 29.75
MWA Mueller Wtr Prods Inc 11.77
KG King Pharmaceuticals Inc 12.35
KFY Korn Ferry Intl 17.24
CENT Central Garden & Pet Co 10.57
CBOU Caribou Coffee Inc 5.78
ARII American Railcar Inds Inc 21.45

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WEDNESDAY’S LINKS TO VISIT

This is true and banks ought to be first on your list

– Do not pay this too much attention. People selling everything to cover other areas, Lampert is buying more, all that matters

I agree, I just think the current market pessimism may give you a much better price, $40ish

– Bueller, Bueller, and the only person making sense out there currently about subprime

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More Bernake Musings

So will Bernanke cut The Fed Fund Rate .25 or .50? Maybe… neither?

Bernanke has shown that unlike his predecessor, Alan Greenspan, he is not going to bail out those in business who make poor decisions. While this may cause a bit of pain now and make for some splashy headlines, once people finally get this, in the long run we will all be better off. Greenspan’s antics (and enormous miscalculations) cause excessive risk to enter the system. This risk now has us where we are today. Hoping the Fed steps in to help lenders who made loans to people who could not pay them back, to home owners who bought homes they could not afford, and for home builders who built more homes that they could sell just will not happen.

Here is the thing. Every party, no matter how good it is or how bad you want it to continue, eventually ends. They all do, it is just a fact. The housing party is ending and like all parties, those who are the last to arrive wish they got there much earlier. Too bad.

When money is virtually free (Greenspan had rates to 1%), people will do very dumb things with it. Bernanke is under no obligation or “moral” dictate to bail these folks out. None. Despite what Democrats trying to win publicity points in congress may say, he has to this point correctly refused. He has no desire to bail out the Countrywide’s (CFC), Washington Mutual’s (WM) of the world who made billions in bad loans. He will, however, provide liquidity to the system so that the Citi’s (C), Bank of America’s (BAC) or Wells Fargo’s (WFC) can keep the wheels greased though and isn’t that what his job is?

What will he do then? I for one think he may actually do nothing at all. If he does give the street a bone, it will only be 1/4 point. Now, it should be noted that based on the bond market’s recent activity currently the effective Fed Funds Rate has been below 5% for some time now. So even is Bernanke does do a 1/4 point drop, it’s reality is meaningless. Bernanke should be given credit for essentially making the meetings rate decision meaningless and creating an situation where the market is setting the rate. Obviously the Fed will guide the markets by capping it but when you have the effective rate below the actual rate, what are people clamoring for a cut for?

What is more important that the Fed’s actions next week is what they say. Bernanke has been very transparent as to his goals to this point has stuck to them despite the market trying to read something else into them. What he says his priority is should determine the market’s reaction to the meeting. That, and only that will determine the Fed’s next move, if any.

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Dell: Just When I Think It Is OK, They Do It To Me Again!!

Talk about counting your chickens before they hatch. I should have learned by now. Dell (DELL) does it to me again.

When we left off yesterday, Dell was going to notify DHL to send the packages to my correct address and credit me the shipping i paid for but did not get. Now, in order to appreciate what comes next, please read yesterday’s post on this here.

I am going about my day playing catch up after they robbed me of 2 hours of it when I get a call at 4:30 pm that DHL is still waiting for Dell to allow them to release the package. I notify them to just forget it and at this point I will just goi pick it up. “No, you can’t” is the reply. What? It seems Dell put a “hold” on the order and it cannot move until they send another email releasing it. I do not blame DHL, they are doing what they legally have to do, I blame you know who!!

Now, another hour on the phone. This time it takes that long because I have to relate the entire days conversations to yet another person who does the 3 minute hold boogie with me while they “look at the file” and then he swears he emailed DHL. Now that the DHL person and I on a first name basis, I call her 20 minutes later and she at that point had not heard from Dell. She says (I actually believe her) she will call me tomorrow “if there is an issue”, talk to you tomorrow Sara…

Now, all this started with the sales process. I gave the new address to both the salesperson and the “payment specialist”. During the course of the day my wife emailes the salesperson for help and get this response..

From: Brett_Engle@Dell.com [mailto:Brett_Engle@Dell.com]
Sent: Tuesday, September 11, 2007 5:23 PM
To: nicoles@VVVVVV.VVV
Subject: RE: Dell Order Has Been Canceled for Dell Purchase ID: XXXXXXXXXX

I have submitted to have the shipping address changed so you can pick it up. I transferred the call to a payment specialist who placed the order so I guess I won’t take credit for this mistake.

Hey, Bud. Way to take the bull by the horns and step up to help a customer!! Notice how he says we “can go pick it up”. It is nice to see Dell tells it’s folks to go the extra mile. Hey Brett, is it coming in pieces so “I can put it together”?

We emailed a reply and simply asked why we had to go pick it up, why can’t DHL deliver it to us?

Our reply from Brett at Dell?

From: Brett_Engle@Dell.com [HYPERLINK mailto:Brett_Engle@Dell.com mailto:Brett_Engle@Dell.com]
Sent: Tuesday, September 11, 2007 5:48 PM
Subject: Read: Dell Order Has Been Canceled for Dell Purchase ID: XXXXXX

Your message

To: Engle, Brett
Cc: ‘Todd Sullivan’
Subject: RE: Dell Order Has Been Canceled for Dell Purchase ID: XXXXXXXXx

Sent: Tue, 11 Sep 2007 16:40:37 -0500

was read on Tue, 11 Sep 2007 16:48:03 -0500

Nothing. Nothing at all. Just a read receipt. I guess they are waiting for DHL to come through for them? Go DELL!!!

I am surprised but think I am a bit of a sucker for being so. If Micheal Dell wants to fix his broken company, stop thinking about ways to sell cheaper products through Wal-Mart (WMT) and maybe keep the ones you have? Stuff like this not only makes you lose people but is a great story to tell at dinner, the bar, a ballgame, hockey practice, everywhere and makes your company look real lousy.

Another thing. I have a family member who works for a large customer of Dell’s who read my in initial post and said to me “just call us next time, we could have had it fixed immediately”. Here is the thing though. Dell ought to treat us all the same. Right? I should not have to go “above someone’s head” to get their own admitted mistake fixed, should I?

Some people will get treated this way and keep it to themselves, others, like me, have a megaphone to tell everyone. You never know who is on the other end of that phone folks….

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Mcdonald’s: This Is How You Do It Howard

No press conferences pronouncing the “dominance”, “super-premium product” or saying they have the “market bought”, just a neat little thing called estimate crushing results. Got to love McDonald’s (MCD)

McDonald’s delighted investors with much stronger than expected same store sales in August.

Asia/Pacific/Mideast/Africa: + 12.4%
Europe: +6.1%
US +7.4%
Company-wide: +8.1%

How good are those results? Consider Goldman Sachs (GS) had projected US same store sales to be up only 4% and Bear Stearns (BS) had estimated just a 5% increase. CEO Jim Skinner said, “Our worldwide sales momentum continues, thanks to our customer-focused emphasis on menu variety and value, convenient service, innovative marketing and contemporary restaurants.” That is it, a one sentence release and their results speak for themselves. No chest thumping or bashing of the competition, when you are in first place, there is no need.

Starbucks (SBUX) could learn a thing or two here. Rather than running around telling everyone how great you are, just go out and prove it. Stop giving press conferences saying “we have bought all the super-premium beans” or that “we have no competition”, you do and whether you know it or not they are whipping your butt good.

McDonalds reminds me of watching Earl Campbell run as a kid. He never said a word, just went out and did his job, running over opposing defenders. Everyone knew he was getting the ball and they could not stop him. He would get up after each tackle looking old and tired as if he was on his last breath and then the ball would be snapped and he would outrun everyone 80 yards to the endzone and then just drop the ball. No fancy dance, no spike, just results. McDonald’s is the same way, we never hear anything from them until they blow the door off another estimate and the stock keeps increasing to ever higher levels.

No show, just results….