Posted By optiondragon for myhappytrading.com
From Breifing.com
Periodicals Wrap-Up for Friday, October 17th
WALL STREET JOURNAL: The Wall Street Journal reported that General Motors (GM) and Chrysler are stepping up merger talks and are strongly supported by potential leaders looking to see a deal done. People familiar with the matter said a deal could be completed as soon as the end of October as GM looks to find new sources of funding…FINANCIAL TIMES: On Citigroup’s (C) Q3 earnings conference call, CFO Gary Crittenden said the company intends to seek out opportunistic acquisitions, despite losing out on its bid to acquire Wachovia (WB). The Financial Times reported that in recent weeks, the company has explored three different acquisitions, including Wachovia and Washington Mutual, which was later acquired by JP Morgan (JPM)…Russian state controlled energy company Gazprom is threatening to cancel a deal to buy a 63% stake in a large Siberian gas field for $700M-$900M from TNK-BP, BP’s (BP) Russian joint venture. According to The Financial Times, Gazprom is taking this position because the company must now focus only on its essential investment…NEW YORK TIMES: Warren Buffett wrote in the New York Times that he has begun using his personal funds to buy the stocks of U.S. companies. If the prices of these stocks continue to be “attractive” in Buffett’s view, 100% of the Oracle of Omaha’s net worth will soon be invested in U.S. stocks, Buffett wrote…
Asian Markets Wrap-Up for Friday, October 17
Stocks in Asia advanced as governments moved to ease the credit markets…JAPAN: The Nikkei 225 Stock Average was up 235.37, or 2.8%, to 8,693.82, while the broader Topix index climbed 29.77, or 3.4%, to 894.29. Tokyo Electric jumped 8.8% to Y2,585. Kansai Electric Power Co.rose 8.4% to Y2,250. Osaka Gas Co.surged 11% to Y355. DoCoMo (DCM) added 7.4% to Y156,500. Nippon Telegraph & Telephone Corp. (NTT) leapt 9.8% to Y425,000. KDDI Corp. was up 7.1% to Y545,000. Yamada Denki Co.climbed 7.7% to Y6,550…CHINA: The CSI 300 Index added 12.36, or 0.7%, to 1,833.26. China Life (LFC) gained 3% to 19.68 yuan. China Pacific Insurance was up 0.4% percent to 12.38 yuan. China Construction Bank Corp. increased 1% to 4.19 yuan. Citic Securities rose 2.4% to 18.72 yuan. Haitong Securities Co. advanced 2.3% to 18.60 yuan. GD Power Development Co. was down 0.19 yuan, or 3.4%, to 5.41…AUSTRALIA: The S&P/ASX 200 Index lost 42.60, or 1.06%, to 3,970.80…AROUND ASIA: In Hong Kong, the Hang Seng Index fell 676.31, or 4.44%, to 14,554.21…In South Korea, the Kospi Index tumbled to a three year low, down 33.11, or 2.7%, to 1,180.67 as financial stocks led the retreat.
Buffett is buying U.S. equities-NY Times
Warren Buffett writes that he has begun using his personal funds to buy the stocks of U.S. companies. If the prices of these stocks continue to be “attractive” in Buffett’s view, 100% of the Oracle of Omaha’s net worth will soon be invested in U.S. stocks, Buffett writes. The billionaire says he has adopted this strategy now because his rule of investing is, “Be fearful when others are greedy, and be greedy when others are fearful.”
Federal Reserve announces interim rule for bank holding companies
The Federal Reserve Board on Thursday announced the adoption of an interim final rule that will allow bank holding companies to include in their Tier 1 capital without restriction the senior perpetual preferred stock issued to the Treasury Department under the capital purchase program announced by the Treasury on October 14, 2008. Treasury established the capital purchase program under the Emergency Economic Stabilization Act of 2008, which became law on October 3, 2008.
AMBAC and bond insurers working on a plan to sell troubled assets-Bloomberg
Ambac (ABK) CEO Michael Callen says the company, along with other bond insurers, may look to present a proposal to the U.S. Treasury as soon as next week on a plan that would allow them to sell troubled assets to the government. In an interview, Callen says the plan would allow the insurers to guarantee some assets with the backing of the government. Callen also says he will not ask the Treasury to take a stake in his company.
U.S. equity futures off their earlier lows
Stock futures have rallied off their lows of the session. The futures started lower after yesterday’s fierce rally but dropped further on continued concerns of a global economic slowdown and housing numbers which were just released. The numbers showed there were 817,000 housing starts versus an expected 872,000. The figures also showed there were 786,000 building permits applied for versus the expected 840,000 predicted by analysts. The poor numbers indicate continued weakness in the housing sector and the futures responded negatively.
Analysts Upgrade Summary for Friday, October 17th
MOST NOTEWORTHY: Kraft Foods (KFT), Express Scripts (ESRX) and Symantec (SYMC) were today’s noteworthy upgrades: Merrill upgraded Kraft Foods to Buy from Neutral citing progress in the company’s turnaround plan, execution, and 2009 earnings growth. Thomas Weisel raised Express Scripts to Overweight from Market Weight and believes the company’s core business remains strong and that valuation is attractive. Friedman Billings upgraded shares of Symantec to Outperform from Market Perform on valuation after checks indicated the company should meet Q2 expectations…OTHER UPGRADES: NeuStar (NSR) was upgraded to Outperform from Neutral at Baird. UBS raised Advance Auto Parts (AAP) to Neutral from Sell. Goldman upgraded Royal Dutch Shell (RDS.A) to Buy from Neutral
Analysts Downgrade Summary for Friday, October 17th
MOST NOTEWORTHY: Zions Bancorp (ZION), Monster (MNST) and Avis Budget Group (CAR) were today’s noteworthy downgrades: Friedman Billings downgraded shares of Zionz Bancorp to Market Perform from Outperform and lowered its target to $33 from $43 following the company’s Q3 results, as they believe near-term credit trends and concerns surrounding its securities portfolio will limit upside. Shares were also downgraded at JP Morgan to Neutral from Overweight due to deteriorating credit trends. Banc of America cut Monster to Neutral from Buy to reflect a lack of margin stability and their belief consensus estimates remain too high. Barclays downgraded Avis Budget Group to Equal Weight from Overweight citing the global economic slowdown and refinancing risk…OTHER DOWNGRADES: Johnson Controls (JCI), Luxottica (LUX) and ArvinMeritor (ARM) were cut to Neutral from Buy at Goldman. Luxottica was also downgraded at HSBC to Neutral from Overweight. JP Morgan cut AuthenTec (AUTH) to Underweight from Neutral
Analysts Initiation Summary for Friday, October 17th
MOST NOTEWORTHY: Gladstone Capital (GLAD), CommVault (CVLT) and Papa John’s (PZZA) were today’s noteworthy initiations: Janney Montgomery believes Gladstone Capital’s management team and lower portfolio investment risk profile warrant a premium valuation. The firm started shares with a Buy rating and $13 target. CommVault was initiated with a Buy rating and $14 target at Cantor, as the firm finds the stock attractively valued given its secular growth rate potential. KeyBanc is positive on Papa John’s management team, growth potential, cost initiatives, and differentiation. Shares were assumed with a Buy rating and $30 target…OTHER INITIATIONS: Arris (ARRS) was initiated at Jefferies with a Hold rating and $7 target. Rigel Pharmaceuticals (RIGL) was initiated at Banc of America with a Neutral rating and $21 target. Morgan Stanley started Hansen Natural (HANS) with an Equal Weight rating
JP Morgan recommends 16 stocks to own over the next 12-18 months
JP Morgan released a list of 16 stocks to own over the next 12-18 months. On the list are 3M Company (MMM), Baxter (BAX), Colgate-Palmolive (CL), CA, Inc. (CA), Devon Energy (DVN), General Mills (GIS), Gilead Sciences (GILD), Google (GOOG), Hewlett-Packard (HPQ), McDonald’s (MCD), Merck (MRK), Monsanto (MON), Nucor (NUE), Philip Morris (PM), Union Pacific (UNP), and Visa (V).
Google-GOOG remains best idea in large-cap internet, says RBC Capital
RBC said GOOG reported a solid Q3 and that the margin upside is significant and marked the first improvement since 1Q07. Target to $525 from $500. Shares are Outperform rated.
Google-GOOG reiterates Buy following Q3 results at Collins Stewart
Collins Stewart believes the quarter shows Google can expand margins and has one of the best fundamentals in the Internet sector. The firm lowered their estimates as they believe top-line and CPC growth remain challenged due to weak global economy, but reiterates a Buy rating on the stock. Target lowered to $525.
United Therapeutics-UTHR upgraded to Buy from Hold at Brean Murray
Brean Murray upgraded UTHR based on valuation. Target $125.
Major Averages at Critical Junctures with Bullish Potential
The price action in the averages yesterday has left us with a very interesting set-up at a critical juncture. There is the potential at least for something bullish to happen. However it is going to require not necessarily large moves up but sustained moves up to accomplish. On the Nasdaq 100 (NDX) we are close to the 10-day moving average at 1343.89. This remains the downtrend resistance line proxy and has been since early September. If we can see the NDX breakout and hold (critically important) above this moving average, this downtrend leg will be snapped. For the QQQQ the corresponding level is at $33.04. For the S&P 500 (SPX) we have a similar configuration. The 10-day moving average, also the downtrend resistance line proxy since early September, is at 980.21. The corresponding SPY level is at $93.77. The last thing anyone who is getting bullish for a trade would want to see now is for the moving averages in question to be reached but not broken to the upside. That would just be another trade to resistance with the risk remaining for that level to be sold rather than bought. A sustained breakout is what will be required to turn the averages. Given the cross-currents of expiration, we may not be in a position to judge this until next week.
Google-GOOG is more resilient to headwinds than other companies, says Citigroup
Citigroup believes the company is more resilient to macro headwinds than other companies after reporting positive Q3 results. The firm lowered their target to $480 from $590, but reiterates a Buy rating on the stock.
Google-GOOG earnings provide more confidence for 2009, says Kaufman
After Google reported results that Kaufman Bros views as generally positive, the firm reports that Google’s free cash flow and margin expansion make them more confident about their 2009 earnings estimate for the company. The firm reiterated their Buy rating.
Jim Cramer’s “Mad Money”
Cramer told viewers that the fundamentals of the world economy and hedge fund industry are the two forces pushing stocks down. Cramer focused on the hedge fund industry as an opportunity in the making. He said hedge-fund selling is occurring at a record pace, with $43B in redemptions alone in September. With that gigantic amount of selling pressure, Cramer said the market is littered with broken stocks, but not necessarily broken companies. Cramer noted consumer products maker Kimberly Clark (KMB) as an example. Kimberly’s stock trader higher Thursday on an upgrade from Goldman Sachs, but Cramer recommended waiting on a pullback before pulling the trigger. Next, Cramer welcomed oil and gas tycoon Boone Pickens to the show to discuss his campaign promoting energy independence for America. Pickens said he doesn’t understand why his plan, which calls for a $1.2 trillion investment to convert 20% of the country’s energy supply to wind power and the use of natural gas as a bridge fuel, is not gaining more traction with the presidential candidates. Pickens said that the American people, however, do support the plan. Pickens said he still supports Clean Energy (CLNE), a provider and operator of natural gas fueling stations and a big proponent of wind power as a clean, renewable and domestic energy source. SELL BLOCK: American International Group (AIG), Cramer said Oct. 21 will be a day of reckoning for the company. On that date, Cramer noted that the companies who wrote insurance policies against the debt of the now defunct Lehman Brothers, will be forced to pay up. MAD MAIL: Wal-Mart (WMT) is the only retailer that Cramer likes in this market. Cramer is still a buyer of Tootsie Roll (TR). LIGHTNING ROUND: (Bullish) COP; CVS. (Bearish) EJ; GRMN; KEG; CBS.
Fast Money Position recap: Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Pete Najarian Owns (AAPL), Is Short (AAPL) Calls, Owns (AAPL) Puts; Pete Najarian Owns (C) Put Spread; Pete Najarian Owns (GS) Call Spread; Pete Najarian Owns (MS), Is SHort (MS) Calls, Owns (MS) Puts; Pete Najarian Owns (YHOO) Call Spread; Pete Najarian Owns (SLB) And Is Short (SLB) Calls; Pete Najarian Owns (SCHW) And Is Short (SCHW) Calls; Finerman Owns (GS); Finerman’s Firm Owns (MSFT), (DEO), (MO); Finerman’s Firm Owns (DNA) Call Spreads; Finerman’s Firm Is Short (USO), (IYR), (IJR), (MDY), (SPY), (IWM); Terranova Owns (AAPL), (EXM), (FCX), (FTO), (MA), (NOV), (POT), (X), (VLO);
Option expiration is today and I expect some good volatility today. I’ll be watching the S&P oct options for fun and everything else including GOOG. AMAG FDA decision is coming Sunday so we are looking forward to that, we have a good hedged position for a play on approval or volatility, I do expect an approval from the FDA but the FDA is known to be very difficult to game lately. See you in the trading room.
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