Microsoft and Google Weigh on Stocks but Volume Fades
July 20, 2008
Missing analyst estimates sets up the stock to get hammered, MSFT and GOOG did just that. Both stocks were tremendous laggards and were the majority of the reason why the NASDAQ was down over 1.2% for the day. The bright side, volume came in lower than the previous day. Options expiry failed to boost volume as it has done in the past. Friday marked Day 4 for the NASDAQ and Day 3 for the S&P 500. If we were to see a distribution day prior to a follow-through day it would spell … [visit site to read more]
Microsoft and Google Weigh on Stocks but Volume Fades
Mother of All Short Squeezes?
July 20, 2008
Matt Blackman submits:
Tuesday’s action by the SEC in amending Regulation Short Sales (RegSHO) listed 19 banks and financial companies for which naked shorting was effectively banned for 30 days. Such a limit was long overdue but why limit the restriction to just 19 companies and just 30 days?
Naked short selling (selling shares short that are not first borrowed, which is required to execute a legal short) is endemic and the SEC has turned a blind eye to it since the agency was created. This recent action is a knee-jerk reaction but a clear example of too little way too late. The question is will they have the stomach to do what it necessary and give all stocks the same naked short protection? But like anything else, the devil is in the detail.
Scarlett O’Hara, Doris Day and Financial Market Tumult
July 20, 2008
Susan M. Mangiero submits:
Remember the 1939 epic classic "Gone with the Wind" wherein Scarlett O’Hara protests serious conversation? Interrupted by news of an imminent Civil War, this party gal (with the famous 17-inch waist) complains. "Fiddle-dee-dee. War, war, war: this war talk’s spoiling all the fun at every party this spring. I get so bored I could scream."
As I read "Why No Outrage" by James Grant (Wall Street Journal, July 19, 2008), I wonder if this southern belle might now be heard to say "Loss, loss, loss: this loss talk is spoiling all the fun." About structural reforms (a 2007-2008 equivalent of losing Tara, the family homestead), Scarlett might encourage delayed action. "After all… tomorrow is another day." Why fuss now?
Scarlett O’Hara, Doris Day and Financial Market Tumult
Tech and Healthcare Offer Growth at a Discount - Barron’s Interview
July 20, 2008
Barron’s interviews boutique money manager Jeff Coons, Co-director of Research at life-cycle portfolio firm Manning & Napier Advisors. Coons says he focuses on absolute value, comparing stocks returns as a premium to risk-free bonds, rather than the popular stance of finding stocks that trade at a relative bargain to peers.
Barron’s asks Coons: How does this market look in terms of investment opportunities?
Tech and Healthcare Offer Growth at a Discount - Barron’s Interview
Accenture Reaps Benefits of Slow Economy - Barron’s
July 20, 2008
At least Accenture, a management consulting and technology outsourcing firm, has been benefiting from the current economic downturn. Companies looking to cut costs and streamline operations have contributed to the $6.77 billion in new bookings in Accenture’s recent FQ3. Yet Barron’s says the company has stayed under investors radars: They don’t realize Accenture (ACN) is the one doing all that corporate downsizing for all those companies now. Its 14 times forward P/E is lower than the 18 times forward P/E that industry rival EDS (EDS) was recently bought for. And Accenture has a strong balance sheet, with about $3.4 billion in cash and investments. It services 90% of all Fortune 100 companies, and is renowned for its dedicated corporate culture and seeing projects through to the end.
The blue-chip IT firm is thriving from helping U.S. companies realign while simultaneously enjoying strong global revenues. Accenture raised its 2008 guidance and forecasted a diluted EPS to $2.63-$2.65, up from its previous range of $2.55-$2.60. In FQ3, revenues jumped 20% while earnings rose 36% to $0.74/share. Analysts say the stock has a 20% upside to the high $40s, from $39.50 currently.
Accenture Reaps Benefits of Slow Economy - Barron’s
Q2 May Be OK, but Challenges Remain
July 20, 2008
James Hamilton submits:
At least that’s the assessment of Federal Reserve Bank of San Francisco economist John Fernald (hat tip: Mark Thoma).
We’ve commented before that housing futures signal further price declines.
Q2 May Be OK, but Challenges Remain
Short Sales: SEC Turns Back the Clock to 1931
July 20, 2008
This past week, the SEC issued an emergency order prohibiting naked short selling in 19 financial stocks, including Fannie Mae (FNM), Freddie Mac (FRE), Lehman Brothers (LEH) and other names in the news. Beginning on Monday (July 21), it won’t be enough to make a good-faith effort to locate shares to borrow. Short sellers will have to have a formal agreement to borrow the shares in these stocks before they actually initiate a short position.
Short Sales: SEC Turns Back the Clock to 1931
Freddie and Fannie: The Case Against Hybrids
July 20, 2008
Matt Cooper (Portfolio.com) submits:
The fallout from the collapse of Fannie Mae (FNM) and Freddie Mac (FRE) stock continues. Yes, the markets have rebounded somewhat. A little good financials news here and there has prevented another freefall, just like with the Bear Stearns weekend of doom earlier this year. But we’re in a weird time. J.P. Morgan Chase (JPM) announces that its income fell 53 percent and the stock soars - because it all could have been so much worse.
In this atmosphere, it’s easy to lose track of the big goal with any Fannie Mae assistance plan. The goal is not just to help Fannie and her little brother, Freddie Mac, through the next few weeks, but hopefully to come up with some kind of prescription that will avoid any crises in the future.
Freddie and Fannie: The Case Against Hybrids
PCX, BUCY, BTU and Other Coal Miners are very Attractive Now (PCX, rated BUY)
July 20, 2008
Currently, 50% of the electricity generated in North America comes from burning coal. While China currently generates 80% of its electricity from coal. There is enough coal left on the planet to last another 230 years. Since 2000, the price of coal has risen from $30 per tonne to around $120 per tonne. The Chinese are paying twice as much for coal now than they did a year ago.
Read more at http://conquerthewallstreet.blogspot.com/2008/07/peabody-ener…
PCX, BUCY, BTU and Other Coal Miners are very Attractive Now (PCX, rated BUY)
Freddie Mac (FRE) is a SELL
July 20, 2008
FRE has only one way to go and that is down. They are thinly capitalized and will only find a bottom after it hits bottom. By bottom I mean Zero or something very close to it. Short term it will probably rise because shorts are being forced to cover but longer term they have big problems. A change in accounting regulations is the only thing that will save them. -NM
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