Submitted By Optiondragon
From Briefing.com
Periodicals Wrap-Up for Tuesday, August 5th
WALL STREET JOURNAL: Last Friday’s Yahoo (YHOO) shareholder vote which supported CEO Jerry Yang with an 85% margin has been questioned by Capital Research Global Investors, a fund that owns about 6% of the company’s shares, according to the Wall Street Journal. Capital Research wants Broadridge Financial Solutions, an independent vote counter, to review the results…NEW YORK TIMES: The New York Times reported that the Securities and Exchange Commission is looking into whether the Value Line (VALU) overcharged the mutual funds it advises. The company alluded to the fact that a settlement could impact its operating performance…The New York Times also reported that Freddie Mac (FRE) CEO Richard Syron discarded internal warnings that could have protected the mortgage giant from some of the problems it now faces, more than two dozen current and former executives said…LA TIMES: The Los Angeles Times reported that Disney (DIS) will raise admissions prices at its domestic parks. One-day tickets for those 10 and older to Disneyland in Anaheim will rise from $66 to $69 and for children ages 3 to 9, the price will increase from $56 to $59…CNBC: CNBC reported that officials at Lehman Brothers (LEH) have held talks about the possible sale of its entire investment management division, including its Neuberger & Berman asset management unit…
AT&T to offer “cloud computing”-WSJ
AT&T (T) has decided to enter the crowded field of companies offering “cloud computing” or a computer networking and storage service that can replace a company’s data center and also provide for on demand payment for bandwidth. Google (GOOG), IBM (IBM) and Amazon.com (AMZN) are offering the service, and Verizon Communications (VZ) is also expected to enter the market.
Lehman mulls sale of its investment management division-CNBC
Lehman Brothers (LEH) executives have discussed the possibility of selling the company’s entire investment management unit in order to raise capital, according to inside sources.
Merrill CEO says he had to stop the bleeding-NY Times
Merrill Lynch (MER) CEO John Thain defended his decision to sell billions of dollars of mortgage investments for pennies on the dollar by saying that he had to do something to stop Merrill’s hemorrhaging and reassure its employees. Thain added that he did not know if he would have had a similar opportunity again in the future.
Asian Markets Wrap-Up for Tuesday, August 5
Stocks dropped, led by commodity producers, after oil and copper prices declined. JAPAN: The Nikkei 225 inched down 0.14% to 12,914.66. Inpex, an energy company, lost 4%, while Sumitomo Metal retreated 3.7%. Nippon Steel (NISTY) dipped 4.9%. Nippon Paper rallied 13% and Oji Paper (OJIPY) gained 4.4%. Credit card issuer Credit Saison (CSASF) jumped 11%. HONG KONG: Shares declined, led by financial institutions. The Hang Seng Index lost 2.51%, closing at 21,949.75. Bank of East Asia (BKEAY) sank 8.3%, after it announced that its 1H08 profit tumbled 52%. Stock operator Hong Kong Exchanges fell 4.7% and HSBC (HBC) declined 2.2%. Cnooc (CEO), an energy company, dove 6.3%, while another energy producer, PetroChina (PTR), lost 2.5%. AROUND ASIA: China’s CSI 300 Index fell 2.53%, while South Korea’s KRX 100 dipped 0.57% and Indonesia’s Jakarta Composite lost 1.89%…Japanese drug company Daiichi Sankyo received permission from the Indian government to buy India’s Ranbaxy Laboratories (RBXLY) for up to $4.6B.
Priceline-PCLN option prices Elevated into EPS
PCLN is recently up $1.38 to $113.10 in pre-open trading. PCLN is expected to report Q2 EPS after the market close today. PCLN August 110 straddle is priced at $15.55. PCLN September option implied volatility of 70 is above its 26-week average of 58 according to Track Data, suggesting larger price fluctuations.
Louis Navellier’s Quantum Growth Update
Louis Navellier’s Quantum Growth Update is positive on MT, EME, MOS, TRA, and X; cautious on WTI.
Deckers Outdoor-DECK: Recommend ahead of 8/7 report@LAZA
Lazard expects DECK to beat and raise given continued Ugg momentum. The firm believes their 2008 EPS estimate of $6.50 and 2009 of $7.80 have upside. Shares are Buy rated.
Louis Navellier’s Global Growth Update
Louis Navellier’s Global Growth Update is positive on ACL, KOF, EURX, SDTH, and IPCR; cautious on MTL, BVN, ELN, and FMS.
U.S. equity futures continue to point to a higher open
Oil prices continue to move lower and now are down more than $2.50 a barrel. The dollar is rallying in the face of weaker oil prices and corporate earnings are continuing to beat investors expectations. Investors will also be watching for the statements from the Fed this afternoon when the FOMC announces its decision on interest rates. The Fed is expected to hold rates steady at 2.0%. Also due out today is the ISM non-manufacturing index which will be released at 10:00 am ET. Analysts are expecting a reading of 48.7.
Genzyme-GENZ initiated with a Buy, target $90@BOFA
Banc of America expects the company’s therapeutics business to be driven by Myozyme uptake and finds the valuation attractive at current levels.
James River Coal-JRCC reports Q2 EPS (97c) vs. consensus of (30c)
Reports Q2 revenue $137.7M vs. consensus of $156.25M.
Leap Wireless-LEAP reports Q2 EPS (38c) vs. consensus of 3c
Reports Q2 revenue $474.9M vs. consensus $477.57M.
The FOMC Decision on Rates, the US Dollar and Commodities
Although the focus up until yesterday was clearly on Crude, yesterday’s large drop in the CRB index has made it clear that the selling of commodities across the board in every form was severe and has been for several weeks. In the pre-market the dollar is trading toward the peak of its six-month range at the 74 area. It is interesting that the July lows in the equity markets came at a dollar trough while the March lows came at a dollar peak. The rally off the July 15th dollar low has seen a move up of +3.41%. This move in part would account for some of the down moves we have seen in commodities. But the moves in severity suggest something else. The markets are behaving as if a tightening cycle by the Fed has already begun. Today’s meeting is going to be a critical one therefore. If commodity price inflation is going to continue to contract, the Fed will have to give a very clear indication beyond jawboning that a tightening cycle is underway. Oddly, the CME Group Fed Watch shows a very small 7% probability of a +25bps hike today. If the Fed does move now all but the currency and commodity markets, which have already reacted in anticipation of a tightening, will be surprised. The risk now, given the importance of inflation as highlighted by Bernanke in his last speech, is to do nothing and postpone the tightening for another day. If the Fed takes no action, we might well see a reversal in currency and commodity moves of the last three weeks which would put further stress on equity markets. Today promises to be far more volatile than usual. The most extreme market moves come when traders are at the greatest degree of disagreement. Be prepared for extreme price movement today across all asset classes.
China Medical-CMED upgraded to Buy from Hold@BMUR
Brean Murray upgraded CMED following the solid Q1 report. Target $55.
Yingli Green Energy-YGE: Expect solid results to be reported tomorow@CSTI
Collins Stewart believes YGE can deliver a solid quarter as pricing and demand were strong, especially in Spain. Collins reiterates a Buy rating and $30 target.
Wachovia-WB: Maintain Buy rating after meeting with CEO@DBAB
Deutsche Bank was impressed by the sell-side lunch with WB’s new CEO and believes Bob Steel has the exact skills needed for the company over the next 1-2 years. Deutsche maintains a Buy rating and $30 target on WB shares.
Alexion Pharma-ALXN: Positive feedback on Soliris@COWN
Cowen spoke with Soliris patients to gain perspective on the drug. The analyst said patients they spoke with were nearly 100% compliant, and extremely pleased with the life benefits of the drug. The analyst is confident that ALXN will achieve peak sales of greater than $750M, with potential upside. Shares are Outperform rated.
Intercontinental Exchange-ICE target lowered to $143 from $168@BOFA
Banc of America lowered their target but finds current valuation levels attractive for long-term investors. They believe ICE’s growth catalysts outweigh the risks and keep a Buy rating on the stock.
GTXI expects to file Toremifene NDA in Q4 with the FDA
Apple-AAPL initiated with a Buy, target $195@UBSW
UBS believes AAPL has a competitive advantage and their checks indicate new Macs, new iPhone colors and potentially new iPods may come early on in the second half of 2008.
Intercontinental Exchange-ICE: Weakness overdone@FBCO
Credit Suisse said weakness following the Q2 report is overdone. The firm said Q2 results were healthy and that outlook is intact. Shares of ICE are the firm’s top pick in the group. Price target lowered to $170 from $185. Shares are Outperform rated.
(Important note on how to use this upgrade/downgrade list with analyst comments and news….you must parse out the factual data (Factual data is the most important) from the opinionated data and always take all analyst comments with a grain of salt. Do not follow blindly with their recommendations. Remember that technicals are the most powerful force in short term direction for stock prices due to the law of supply and demand.)
Jim Cramer’s “Mad Money”
Monday’s show had Cramer outlining 25 rules that he says will help investors play the markets defensively to avoid big losses and keep their money safe. 1. Stay Diversified- He advocated not having more than 20% of your portfolio in any sector and avoiding having “two-of-a-kind” at all costs. 2. Buy and sell slowly. 3. Your first loss is your best loss. 4. Dividends limit losses. 5. It’s always good to have some cash. 6. Don’t own too many volatile stocks. 7. Know what you own. 8. Don’t own low-dollar stocks. 9. Accounting irregularities equals sell. 10. Stay away for two good quarters following an earnings shortfall. 11. When your broker stops talking about a stock, it’s time to sell. 12. After a big run, get defensive. 13. If a stock’s dividend yield is twice that of Treasuries, sell it. 14. If a company has a new CEO, stay away. 15. Never turn a trade into an investment. 16. Never sell call or put options. 17. Never use margin. 18. Never buy a stock at its all-time high; wait for a 5% to 8% pullback before pulling the trigger. 19. Play with the house’s money. 20. Keep your head clear. 21. Contribute to retirement accounts throughout the year. 22. Mutual funds should be diversified, too. 23. Playing defense is crucial in volatile markets. 24. Invest in stocks with buyback programs. 25. Don’t stop looking at your monthly statement - you won’t know how bad things really are. Keep your eyes open and stay current.
Fast Money position recap- First Moves: Karen likes MSFT, Tim is adding to his EEV, Jeff likes COST, Guy likes JNJ.
Finerman’s Firm Is Short (IYR) (IJR) (MDY) (SPY) (IWM) (COF) (BBT) (XLF), Finerman’s Firm And Finerman Own (C) Leaps, Finerman Owns (GS), Finerman’s Firm Owns (MO) (MSFT) (PM) (SUN) (TSO) (VLO), Macke Owns (MSFT) (WMT) (COST), Macke Is Short (TM), Adami Owns (AGU) (C) (BTU) (GS) (INTC) (MSFT) (NUE), Seymour Owns (AAPL) (CSCO) (INTC) (MER) (MSFT) (TSO) (EEM) (F) (SHLD), Seygem Asset Management Owns (EEV), Joe Terranova Owns (BNI), Jon Najarian Owns (EMC) Calls, Jon Najarian Owns (CSCO) Calls.
Art Cashin says he is looking for a goldilocks statement from the Fed which is that inflation is moderating and the economy is stabilizing. Commodities got walloped yesterday and it could be more of the same as the commodity unwind continues. This is good for economy as lower commodity prices reduces the drag on the economy.
The story could be about financials and the dollar today so I will be keeping an eye on both especially after the Fed decision. Keeping light on my feet going into the Fed statement. Pick plays with a high probability of success, have focus and patience, run technicals through support and resistance. Great luck and HappyTrading.
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