More Earning Season Results

YRC Worldwide (YRCW): Q1 EPS -$0.81 not comparable to consensus of -$0.25. Revenue of $2.23B in line. Sees Q2 EPS of $0.30-0.40, better than consensus of $0.33.

Vale (RIO): Q1 EPS of $0.41 misses consensus of $0.52. Revenue of $8.05B vs. consensus of $8.74B. Shares fell 5%

Microsoft (MSFT): FQ3 EPS of $0.47 beats consensus of $0.44. Revenue of $14.45B vs consensus $14.5B. Sees Q4 EPS of $0.45-0.48, lower than consensus of $0.48, and revenue of $15.5-15.8B vs. consensus of $15.56B. Sees 2008 EPS of $2.13-2.19, better than consensus of $1.87, and revenue of $66.9-68B vs. consensus of $60.18B. Shares fell 5%.

MEMC (WFR): Q1 EPS of $0.84 misses consensus of $0.85. Revenue of $501M in line. Sees Q2 revenue of $540-570M vs. consensus of $566M. Shares fell 3.65%.

KLA-Tencor (KLAC): FQ3 EPS of $0.67 beats consensus of $0.63. Revenue of $602M vs. consensus of $586M. Shares gained 0.8%.

Ingram Micro (IM): Q1 EPS of $0.37 misses consensus of $0.39. Revenue of $8.58B vs. consensus of $8.87B. Sees Q2 EPS of $0.34-0.37 vs. consensus of $0.37, and revenue of $8.5-8.75B vs. consensus of $8.56B. Shares fell 1.6%.

CNet Networks (CNET): Q1 EPS of -$0.04 in line. Revenue of $91M vs. consensus of $94M. Sees Q2 EPS flat vs. consensus of $0.01, and revenue of $100-104M vs. consensus of $103M. Sees 2008 EPS of $0.03-0.04 vs consensus of $0.07, and revenue of $440-460M vs. consensus of $444M. Shares gained 1.2%.

Cheesecake Factory (CAKE): Q1 EPS of $0.21 in line. Revenue of $393.8M vs. consensus of $396.3M. Shares gained 0.6%.

Baidu.com (BIDU): Q1 EPS of $0.67 beats consensus of $0.60. Revenue of $81.9M vs. consensus of $75.39M. Sees Q2 revenue of $111-114M vs. consensus of $101M. Shares gained 2.2%.

American Express (AXP): Q1 EPS of $0.84 beats consensus of $0.81. Revenue of $7.19B in line. Shares gained 4.54%.

Amgen (AMGN): Q1 EPS of $1.12 beats consensus of $1.04. Revenue of $3.61B in line. Sees 2008 EPS of $4.00-4.30 vs. consensus of $4.18, and 2008 revenue of $14.2B-14.6B vs. consensus of $14.51B. Shares gained 0.2%.

AmeriCredit (ACF): FQ3 EPS of $0.31 beats consensus of $0.21. Revenue of $639M vs. consensus of $630M. Shares climbed 6.8%.

Altria Group (MO): Q1 EPS of $0.37 in line. Revenue of $4.41B vs. consensus of $3.83B. Shares fell 1.8%.

QUALCOMM (QCOM): FQ2 EPS of $0.54 beats consensus of $0.52. Revenue of $2.61B vs. consensus of $2.5B. Sees Q3 EPS of $0.50-0.52, in line, and revenue of $2.5-$2.7B vs. consensus of $2.47B.

Pulte Homes (PHM): Q1 EPS of -$2.75, worse than consensus of -$0.77. Revenue of $1.4B in line. Pulte took a $664M charge related to inventory impairments and other land-related charges.

Potash (POT): Q1 EPS of $1.74 beats consensus of $1.52. Revenue of $1.8B vs. consensus of $1.67B. Sees Q2 EPS of $2.20-2.50, better than consensus of $2.27. Potash raised its 2008 EPS forecast to $9.50-10.50 from $6.25-$7.25, vs. consensus of $8.62. Shares are up 3.9% in the pre-market.

PepsiCo (PEP): Q1 EPS of $0.70 was in line. Revenue of $8.33B vs. consensus $7.97B. Pepsi expects 3-5% volume growth in 2008.

Motorola (MOT): Q1 loss of $0.09/share, worse than consensus of $0.07. Revenue of $7.45B vs. consensus of $7.75B. Sees Q2 EPS of -$0.02-0.04 vs. consensus of $0.01.

Ford (F): Q1 EPS of $0.05, far better than the consensus of -$0.16. Revenue of $39.4B vs. consensus of $38.46B. CEO Alan Mulally said the remainder of year will be a challenge, but that he's cautiously optimistic.

Credit Suisse (CS): Q1 net loss of CHF 2.15B after taking a CHF 5.3B ($5.2B) writedown on CDOs, LBO debt and mortgage-backed securities. Net revenue was CHF 3.02B, down 72%. "The number of times people have seen the light at the end of the tunnel it turned out to be a train coming down the tracks," CEO Brady Dougan said. CDO and leveraged-loan exposure was down considerably. "The fact that they have trimmed their exposure so dramatically is good, and to me means this is the last unprofitable quarter," Landsbanki Kepler analyst Dirk Becker said. Shares were up 2.1% in pre-market trading.

Chipotle Mexican Grill (CMG): Q1 EPS of $0.52 beats consensus of $0.48. Revenue of $305.3M vs. consensus of $298.4M. Expects 2008 comparable restaurant sales growth in the mid-single-digits.

Amazon.com (AMZN): Q1 EPS of $0.34 beats consensus of $0.32. Revenue of $4.13B vs. consensus of $4.08B. Sees Q2 sales $3.875-4.075M, better than consensus of $3.84B.

Apple (AAPL): FQ2 EPS of $1.16 beats consensus of $1.07. Revenue of $7.51B vs. consensus of $6.96B. Apple sees Q3 EPS of about $1.00, less than consensus of $1.10, and revenue of about $7.2B, in line. Gross margin fell to 32.9% from 35.1% Y/Y. Mac shipments soared 51% from a year ago, and now account for 47% of AAPL's total revenue. It sold 1.7M iPhones, in line with estimates. iPod sales were up just 1% to 10.6M. Shares are down 0.8% in pre-market trading. "The Mac business is on fire," Piper Jaffray's Gene Muster said. But "investors wanted more of the phenomenal revenue flowing through to the bottom line."

Yahoo (YHOO) surpassed estimates with EPS of $0.11 (consensus: $0.09); revenue rose 14.3% to $1.35B (consensus: $1.32B). It reiterated 2008 revenue guidance of $7.2-8B. While impressive, analysts said the beat would not be enough to jolt a substantially higher bid from suitor Microsoft.

Ambac (ABK): Loss of $6.93/share vs. -$1.31 consensus (that's right). Writedowns on credit derivative exposure were $1.725B. "The housing market crisis continues to disrupt the global credit markets and our credit derivatives and direct mortgage portfolios were severely impacted once again," but ABK says it exceeds S&P's AAA capital target by a comfortable margin and that it has enough capital to get it through the difficult period.

Boeing (BA): EPS of $1.62 vs. $1.35 consensus. Revenue of $15.99B (+4.1%) vs. $16.52B consensus. Boeing sees 2008 EPS of $5.70-5.85 vs $5.93 consensus and revenue of $72-73B vs. $74.49B consensus.

Delta Air Lines (DAL) lost $0.69/share, worse than the $0.51/share loss analysts predicted. Revenue of $160.5M beat the $138M consensus.

EMC (EMC): Q1 EPS of $0.16 in line. Revenue of $3.47B in line.

VMware (VMW) posted a modest Q1 beat (EPS of $0.22 in line; revenue of $438M vs. consensus of $422M), but that didn't stop traders from bidding up shares 14.6% in AH trading. VWware expects 50% revenue growth in 2008, or about $1.99B -- in line with estimates. License revenue grew 73% to $294M; service revenue increased 62% to $144M.

Broadcom (BRCM): EPS $0.14 (not comparable with $0.28 consensus). Revenue: $1.03B (+14.5%) vs. $0.99B consensus. BRCM said stronger-than-expected results were due to greater demand in its traditional wireline business. It remains cautious on the macroeconomic front, but sees "solid revenue growth" in Q2. Shares rose 9%.

Yum! Brands (YUM) beat by $0.02 with EPS of $0.42. Revenue: $2.41B (+8.3%) vs. $2.35B consensus. 2008 EPS guidance of $1.87 vs. $1.86 consensus. Shares were flat in AH.

AT&T (T) posted in-line EPS and revenue of $0.74 and $30.74B. Wireless subscribers were up 1.3M (8.7%) vs. a year ago on strong iPhone sales. Ever since AT&T and Apple cut the price, every single week they've been taking market share from Verizon. Broadband revenue grew 13.2% to 14.6M. U-verse TV subscribers were up 148,000 to 379,000 -- on track to reach target AT&T's year-end target of 1M+.

Western Union's (WU) EPS of $0.29 beat estimates by a penny. Revenue of $1.3B was in line. WU sees 2008 EPS of $1.25-1.29 vs. consensus of $1.27, and 2008 revenue growth of 9-11%.

Lockheed Martin (LMT) beat by $0.12 with EPS of $1.75. Revenue of $9.98B (+7.3%) beat estimates of $9.69B. For 2008, LMT sees EPS of $7.15-7.35 (consensus: $7.37) and revenue of $41.8-42.8B (consensus: $42.8B).

McDonald's (MCD) reported Q1 EPS of $0.81, beating estimates by $0.11. Revenue of $5.61B (+6.1%) also exceeded estimates of $5.4B. Global same-store sales gained 7.4% (consensus: 6.4%).

JetBlue Airways (JBLU) lost $0.04/share, better than the $0.07 loss analysts forecast. Revenue of $816M (+34.2%) was better than the $786M consensus. JBLU says it will now allow customers one free bag check; the second will cost $20.

(Source: SeekingAlpha)

China Mobile: A Stock With Alot Of Upside

Introduction
China Mobile Limited (CHL) is an investment holding company and a mobile services provider in China. Its principal activity is providing mobile telecommunications and related services in 31 provinces, autonomous regions and directly administered municipalities in Mainland China and Hong Kong. As of December 31, 2007, the total number of subscribers reached 369.339 million. The Company’s businesses can be primarily divided into voice business and new businesses.

Recent Earnings Report
China Mobile Ltd., the country's biggest mobile phone carrier, said Monday its first-quarter profits surged while China Telecom Ltd., the country's main fixed-line carrier, reported essentially flat earnings, reflecting a shift in consumer tastes.

China has the world's biggest population of mobile users, with some 520 million accounts, and the government says that number should reach 600 million soon.

China Mobile said profits for the three months ending March 31 rose 37.2 percent over the same period of 2007, to 24.1 billion yuan ($3.4 billion). It said the number of subscribers rose 6 percent to 392 million.

China Mobile said the rate at which it signs up new accounts accelerated by 33 percent to 7.6 million per month in the quarter, driven mostly by new business in rural China. With many of the more prosperous eastern Chinese cities saturated, rural areas are the new target.

Beijing is believed to be on the verge of approving licenses for third-generation, or 3G, mobile service to support mobile video, Web access and other services. That is expected to boost revenues further for mobile carriers as it opens up new opportunities. China Mobile launched trial service this month of a homegrown Chinese 3G standard, known as TD-SCDMA, in Beijing and seven other cities.

Recent Analyst Target
Analysts at Pali Research maintain their "buy" rating on China Mobile Ltd. The target price has been reduced from $115 to $112. In a research note, the analysts mention that the company has posted its 1Q subscriber growth ahead of the recently raised estimates.

Although China Mobile’s subscriber growth and margins continue to be robust, the company’s ARPU for the quarter fell short of the estimates, the analysts say. The EBITDA estimates for 2008 and 2009 have been reduced from CNY239.2 billion to CNY234.1 billion and from CNY303.1 billion to CNY295.0 billion to reflect lower ARPU assumptions.

Technical Analysis
Current Price: 84.58
RSI = 60+
Fast Stochastics = 83+
MFI = 57+
Accumulation phase.

Technicals point to slightly overbought conditions. This might lead to pullback in the stock price, but after that CHL will continue its upward descent.

(Source: Forbes, Google Finance)

Q1 2008 Earning Season - Part 1

Yahoo! Reaffirms Revenue Guidance
Yahoo! (YHOO) said it expects second quarter revenue of $1.73 billion to $1.93 billion and continues to expect 2008 revenue of $7.20 billion to $8.00 billion, including TAC. The current consensus estimate is revenue of $1.4 billion for the quarter ending June 30, 2008 and revenue of $5.7 billion for the year ending December 31, 2008, excluding TAC.

Broadcom Sees Revenue Above Estimates
Broadcom (BRCM) said during its conference call it expects second quarter revenue of $1.075 billion to $1.125 billion. The current consensus estimate is revenue of $1.03 billion for the quarter ending June 30, 2008.

ANADIGICS Guides Above Estimates
ANADIGICS (ANAD) said it expects second quarter earnings of $0.16 to $0.17 per share on revenue of $77.0 million to $79.0 million. The current consensus earnings estimate is $0.13 per share on revenue of $73.0 million for the quarter ending June 30, 2008.

Peabody Energy Raises Guidance
Peabody Energy (BTU) said it expects second quarter earnings of $0.35 to $0.60 per share and now expects 2008 earnings of $2.20 to $3.00 per share. The company's previous guidance was 2008 earnings of $1.00 to $1.85 per share. The current consensus earnings estimate is $0.48 per share for the quarter ending June 30, 2008 and earnings of $1.95 per share for the year ending December 31, 2008.

Yum! Brands Revises Guidance
Yum! Brands (YUM) said it now expects 2008 earnings of approximately $1.87 per share, excluding gains of up to $0.06 per share. The company's previous guidance was earnings $1.85 to $1.87 per share and the current consensus earnings estimate is $1.87 per sharefor the year ending December 31, 2008.

Lockheed Martin Raises Earnings Guidance to be Closer to Estimates
Lockheed Martin (LMT) said it now expects 2008 earnings of $7.15 to $7.35 per share and continues to expect revenue of $41.8 billion to $42.8 billion. The company's previous guidance was earnings of $7.05 to $7.25 per share and the current consensus earnings estimate is $7.36 per share on revenue of $42.80 billion for the year ending December 31, 2008.

Western Union Guides Inline
Western Union (WU) said it expects 2008 earnings of $1.25 to $1.29 per share. The current consensus earnings estimate is $1.27 per share for the year ending December 31, 2008.

Coach Raises Revenue Guidance
Coach (COH) said it continues to expect 2008 earnings of approximately $2.06 per share and now expects revenue of approximately $3.18 billion. The company's previous guidance was for revenue of at least $3.15 billion and the current consensus earnings estimate is $2.04 per share on revenue of $3.15 billion for the year ending June 30, 2008.

DuPont Reaffirms
DuPont (DD) said it continues to expect second quarter earnings of approximately $1.05 per share and 2008 earnings of $3.40 to $3.55 per share. The current consensus earnings estimate is $1.09 per share for the quarter ending June 30, 2008 and earnings of $3.47 per share for the year ending December 31, 2008.

BJ Services Guides Below Estimates
BJ Services (BJS) said it expects third quarter earnings of $0.30 to $0.43 per share. The current consensus earnings estimate is $0.51 per share for the quarter ending June 30, 2008.

TI Guides Inline
Texas Instruments (TXN) said it expects second quarter earnings of $0.42 to $0.48 per share on revenue of $3.24 billion to $3.50 billion. The current consensus earnings estimate is $0.48 per share on revenue of $3.44 billion for the quarter ending June 30, 2008.

Netflix Revises Guidance; Remains Inline with Estimates
Netflix (NFLX) said it expects second quarter earnings of $0.33 to $0.42 per share on revenue of $334.0 million to $339.0 million. The current consensus earnings estimate is $0.38 per share on revenue of $335.4 million for the quarter ending June 30, 2008. The company also said it expects 2008 earnings of $1.16 to $1.29 per share on revenue of $1.35 billion to $1.39 billion. The company's previous guidance was earnings of $1.18 to $1.30 per share on revenue of $1.345 billion to $1.385 billion and the current consensus earnings estimate is $1.24 per share on revenue of $1.37 billion for the year ending December 31, 2008.

Merck Reaffirms
Merck & Co. (MRK) said it continues to expect 2008 earnings of $3.28 to $3.38 per share. The current consensus earnings estimate is $3.29 per share for the year ending December 31, 2008.

Caterpillar Reaffirms
Caterpillar (CAT) said it continues to expect 2008 earnings of $5.64 to $6.18 per share on revenue of $47.25 billion to $49.50 billion. The current consensus earnings estimate is $5.84 per share on revenue of $47.74 billion for the year ending December 31, 2008.

Honeywell Raises Guidance, but Earnings Remain Inline with Estimates
Honeywell (HON) said it now expects 2008 earnings of $3.70 to $3.80 per share on revenue of $36.80 billion to $37.40 billion. The company's previous guidance was earnings of $3.65 to $3.80 per share on revenue of $36.10 billion to $36.70 billion and the current consensus earnings estimate is $3.76 per share on revenue of $36.74 billion for the year ending December 31, 2008.

Xerox Affirms
Xerox (XRX) said it expects second quarter earnings of $0.28 to $0.30 per share, excluding a restructuring charge of $0.05 per share. The current consensus earnings estimate is $0.29 per share for the quarter ending June 30, 2008.

Economists Even More Gloomy About US Prospects

CNBC has a story about how economists are gloomy about US economy: Economists Even More Gloomy About US Prospects

Business economists are turning pessimistic about the U.S. outlook and increasingly fear economy will slip into a recession in coming months.

The National Association for Business Economics said that the 109 members who responded to its quarterly survey were "notably downbeat" about their first-quarter experience and about near-term prospects.

For the first time in five years, reports of falling profit margins outnumbered reports of rising margins in the first quarter of 2008.

.....

"Seventy percent say they are more pessimistic than three months ago," NABE said.

Among other concerns, 66 percent of respondents said they paid more for materials in the first quarter this year, which NABE said was the highest share since 2004. They blamed weakening markets and soaring commodity prices for squeezing profit margins.

.....

"Thirty-nine percent of respondents stated that tightening credit conditions have negatively affected their business, up from 26 percent in January," NABE said.

Employers were cautious about hiring, with 34 percent saying they will add jobs over the next six months and 23 percent planning to cut staff.

.....

April Weekly Buzz

CEOs are pessimistic about the economy (kansascity.com)

World Markets Says U.S. Economy in a Recession (bloomberg.com)

Mortgage fraud is a growing problem (azcentral.com)

4,000 U.K. Real Estate Agents Might Have to Close (bloomberg.com)

Financial Meltdown and the Madness of Imperialism (indybay.org)

The Housing Crisis and Credit Crunch (rightsideadvisors.com)

Citigroup May Need to Sell Assets to Bolster Capital (bloomberg.com)

Speculation Growing Fed May Be Done Cutting Rates (cnbc.com)

U.K. Banks Need $200 Billion Aid (bloomberg.com)

Financial CEOs See Recession on the Way (wsj.com)

Recession Forces Teens To Curb Spending (commoncensus blog)

Californians' confidence in economy drops to record low (tradingmarkets.com)

Industrial properties hit by slump in economy (startribune.com)

Credit Crisis Could Affect Markets for Decade

CNBC has a story about how credit crisis affect markets for decade : Credit Crisis Could Affect Markets for Decade

The credit crisis will affect financial markets for at least a decade and lead to greater regulatory powers for central banks, analysts at JP Morgan said.

"Market participants and regulators will focus intensely on controlling the risks that were at the core of the crisis," analysts led by Jan Loeys and Margaret Cannella wrote in a note on Monday. These risks include lending standards in mortgages, leverage in the funding of securitized products, and the use of short-term financing for illiquid long-term assets outside of the regulated banking sector.

...

It looks like it takes a generation for the memory to fade and for the same mistakes to be made again. Global equity markets remained extremely cheap on all risk measures even five to six years after the end of the dotcom crash. As a result of these changes in behavior, banks will become bigger, safer and somewhat less profitable as they will retain more assets on balance sheet. Securitization will be reduced, and no longer rely on short-term funding structures that assumed liquidity as a given, although it will survive.

...

The biggest change as a result of the crisis will be in regulation, with the focus on the off-balance sheet structures that the financial world has created.

...

This was a run on the securitized world. The bank regulation and the structure of the supervisory system was created for a banking world of taking deposits and making loans. That world has moved towards capital markets, which were regulated from the point of view of consumer protection, but not from a systemic stability point of view. Banks did not have the tools to try to protect the capital market from its own excesses.

As a result, central banks will be forced to take on more power as they are the entities extending support to the markets, Loeys said.

With credit crisis looming upon the economy, the stock prices will be suppressed for years to come.

Credit Crunch Hurts Hedge-Fund Stars

WSJ: Credit Crunch Hurts Hedge-Fund Stars

David Tepper, founder of hedge-fund firm Appaloosa Management LP, saw a negative 17% return last quarter in two funds with more than $6 billion in assets combined as bets on distressed debt went awry, according to fund documents. His Appaloosa Investment and Palomino funds gave up most of that ground in January and February, as declining prices for mortgage-backed bonds and other debt investments caused broad credit-market seizures.

...

Some hedge-fund managers who have fared better this year are saying the wild ride in the markets isn't over. "As we enter the second quarter, the volatility seen in past months does not appear to be in the process of disappearing soon," wrote Philip Falcone, a former head of high-yield trading at Barclays Capital who runs $19 billion hedge-fund firm Harbinger Capital Partners, in a quarter-end letter to his investors. "Rising default rates, consumer struggles, weak labor markets and contraction in manufacturing/nonmanufacturing sectors continue to dampen the U.S. economy." Harbinger posted returns of about 8% in its $15 billion Harbinger Capital Partners fund and 4.5% in its $4 billion Special Situations fund last quarter, according to client letters.

Another hedge-fund giant, John Paulson, whose Paulson & Co., of New York, oversees $32 billion, once again is taking advantage of credit turmoil, with a 10% rise at its Credit Opportunities funds in the first quarter, according to fund documents. Mr. Paulson personally profited to the tune of an estimated $3 billion last year on bets correctly forecasting the housing-market plunge.

Some hedge-fund managers' troubles have mounted this year as banks tightened standards for buyers of risky assets such as securities backed by subprime mortgages to people with poor credit. Margin calls, or demands for increased assets or cash as collateral for loans, have caught some hedge funds short, causing them to unload assets and sparking a broader sell-off of securities and price declines in more highly rated assets.

As the dominoes fell, London hedge fund Peloton Partners LLP imploded in late February. But Appaloosa, for one, stabilized somewhat, with its two funds down 3.4% for March. The troubles of others, though, were gaining momentum.

John Meriwether's JWM Partners LLC, of Greenwich, Conn., had a negative 31% first-quarter return in his Relative Value Opportunity Fund, the firm's biggest. It included a decline of more than 20% in March alone, according to a fund document. The bond portfolio, which started the year with more than $1.2 billion, was hammered by investments in Japanese government securities. Mr. Meriwether, 60, is perhaps best known as a founder of Long-Term Capital Management, the hedge fund whose loss of $4 billion in 1998 threatened a global financial crisis.

Hedge funds world-wide across all investment styles posted losses of 2.8% on average, after fees, last quarter, according to Hedge Fund Research, the Chicago firm that tracks fund performance. Most relative-value managers and those who specialize in fixed-income trading finished the quarter down 2.6% to 6%, on average, depending on their focus.

April 9th: Daily Doze

1. Small Business Optimism Index Hits All-Time Low (CNBC)
2. Despite upbeat commercial real estate report, experts worried (Maryland Daily)
3. China becomes world's biggest gold producer (AFP)
   
4. Pending Home Sales Fall 1.9% to Record Low (CNBC)
5. Are We In Denial About The US Economy & Stock Market? (ETFGuide)
   
6. Retail real estate market sluggish in 1Q (SanAntonio BizJournal)
   
7. New projections of slow growth spurred March rate cut: FOMC minutes (MarketWatch)
8. Credit Crisis to Worsen Before Improving, Soros Says (Bloomberg)
9. A trading low or a market bottom? (MarketWatch)
10. 5 Overbought Stocks for Traders (Yahoo)
11. U.S. Economy to Stall as Consumer Spending Cools, Survey Shows (Bloomberg)
12. Housing plan to help 500,000 borrowers (Reuters)
    
13. Fed May Slow Pace of Rate Cuts in Face of Shrinking Economy (Bloomberg)
14. Can Wall Street's Appetite For Leverage Stomach Regulation? (SeekingAlpha)
    
15. State tells bank customers Idaho banks are safe and sound (IdahoStatesman)
    

200 DMA: Something Big Is About To Happen

IMF Issues Gloomy Assessment of Markets

News Press: IMF Issues Gloomy Assessment of Markets

The International Monetary Fund on Tuesday said the global credit crisis, despite some recent improvement, remains a significant threat to economic growth.

Despite "unprecedented intervention" by central banks such as the Federal Reserve, "financial markets remain under considerable strain, now compounded" by a slowing economy, low levels of capital at financial companies and widespread efforts to unload debt, the fund said.

The U.S. mortgage and credit crises could cause almost $1 trillion in financial losses, the IMF said in an update to its Global Financial Stability Report, with $565 billion of those losses stemming from the residential mortgage market and related securities, and the rest from the commercial real estate, consumer credit and corporate debt markets. That estimate is toward the higher end of estimates by many Wall Street economists, who have pegged the costs of the residential mortgage meltdown at $400 billion to $600 billion.The IMF's figure includes $200 billion in losses that banks have already announced, plus an additional $80 billion the banks have yet to write down, IMF officials said during a briefing. The rest is held by other financial institutions, such as hedge funds and pension funds, the officials said.

...

Credit markets have stabilized since last month, IMF officials said, when Bear Stearns Cos., the fifth-largest U.S. investment bank, was acquired by JPMorgan Chase & Co. at a fire-sale price. But now, a weakening U.S. economy is placing "additional pressure on banks' balance sheets, which may limit their capacity to lend," Caruana said. Caruana urged banks to seek additional capital so they can continue to lend and "avoid a credit contraction in the broader economy." Caruana said investments earlier this year by government-run investment funds in large U.S. and European banks "have helped, but more may be needed to restore their lending capacity."

...

The IMF is developing a voluntary code of best practices for the funds, which have sparked some concerns in the United States and Europe because they are government-run. Critics fear they could invest for noncommercial reasons, such as to obtain sensitive technologies.

While some sovereign fund managers, such as China's, have criticized the IMF's efforts, Caruana said the code could "help ... to mitigate some of the concerns" about sovereign funds.

"We think that it is very important to keep the financial system open and competitive," Caruana said.

Government regulation and supervision of the financial sector, along with private sector risk management, "all lagged behind the rapid innovation" of banks and securities firms, which resulted in "excessive risk-taking, weak underwriting ... and asset price inflation," the IMF said in its report.

...

Among other steps, the IMF recommended streamlining regulation of the financial sector to avoid subjecting banks and other financial firms to multiple supervisors.

With IMF gloomy report, market was supposed to tank. However the market did held on to plethora of bad news, waiting for earning season to kick in. Alcoa starts the season with 54% drop in profits...Sign of bad things to come...

UPS Cuts Outlook on Lower Volume and Fuel Costs

CNBC has a story about UPS cutting their outlook : UPS Cuts Outlook on Lower Volume and Fuel Costs

United Parcel Service, the world's largest shipping carrier, cut its first-quarter profit guidance Tuesday, citing lower volume and higher fuel costs.

The company said it now expects earnings per share of 86 cents or 87 cents. Previously, the company said it expected first quarter profit between 94 cents and 98 cents per share.Analysts polled by Thomson Financial were expecting earnings of 93 cents per share. UPS shares fell about 4 percent in electronic after-hours trading.

The company said lower volume trends from February continued through March, making it impossible to meet its prior guidance.

Atlanta-based UPS said a shift away from premium products and higher fuel costs also contributed to the guidance cut.

Weaker dollar has lead to higher inflation affecting oil prices. The Federal Reserve faces a dilemma now as to low interest rates to save banks from imploding and stimulating the economy or to focus on weaker dollar and control inflation. Right now lower interest rates is winning the battle, hurting profit margins of companies like UPS and Fedex.

Beware These Toxic Stocks

BusinessWeek has an interesting story about Toxic Stocks: Beware These 'Toxic' Stocks

Bullish noises for the market abound. Fed Chairman Ben Bernanke makes it clear that he's prepared to pull out all the stops to prevent economic collapse, and Treasury Secretary Henry Paulson is talking up broad investor-friendly reforms for market regulators. And, while still behind the fiscal curve, Congress is finally recognizing that emergency measures are needed to help alleviate homeowners' pain and to help prevent a financial catastrophe.

With the close of a dismal first quarter, there hangs a faint whiff of optimism in the air over Wall Street. But a warning to investors ready to plunge into the market: Beware of land mines. Even if you think you know perfectly well which stocks are safe, the current market remains a beehive of hazards. Watch out, first of all, for "toxic" stocks that may appear enticing now, but could poison your portfolio at this critical stage of the market.

In investing, spotting stocks that could implode is as important as picking the potential winners. With the market as volatile as it is, it would be wise for investors to expect a surprise that could swing stocks skyward, in which case droves of investors would flood in, enthused to buy. But an equally compelling case can be made that the market will deliver a negative surprise, ensuring further chaos. Either way, it is essential to guard against "time-bomb" stocks, especially now when the market is displaying signs that the bull is ready to ram the gates.

"Although the absolute bottom can't be determined, the amplification of volatility, panic, and fear has built a base (floor) in the major market indexes," says Eric Parnes, managing director of Technomart Investment Advisors. The next move should be a "sustained rally that will challenge the highs the market established in August, 2007," predicts Parnes, who is also editor of the market newsletter Shortex.

Certainly there are stocks to chase now, but emotion should be the last to dictate which stocks to buy. One factor that's important to consider in ferreting out potential winners, as well as potential toxic stocks: plain old fundamentals.

Parnes argues that given such a parameter, investors should flee from, among others, Winnebago Industries (WGO), Valero (VLO), and Williams-Sonoma (WSM). Winnebago, the Iowa-based maker of self-contained recreation vehicles used primarily for leisure activities, is suffering from an earnings squeeze, says Parnes. It reported second-quarter earnings of 9¢ a share, a 67% drop from analysts' expectations of 21¢. What's crimping earnings are high inventory, a declining backlog, rising gasoline prices, and high borrowing costs. Now at $17 a share, just above its 52-week low, Parnes expects Winnebago to drop to $12.

Valero, the largest oil refiner in North America, is under pressure because of expectations that margins will turn sharply lower. The stock, now at $50 a share, could retest its previous low of $44, says Parnes. And Williams-Sonoma, a specialty retailer of upscale products for the home, owns Pottery Barn, West Elm, and Williams-Sonoma Homes. The company is among those suffering from the decline in consumer spending as a result of the housing slump, says Parnes, who expects the stock, now at $26 a share, to see $14.

Some of the department-store stocks should definitely scare away investors, says Georges Yared, president of Yared Investment Research, among them Macy's (M), which operates more than 800 Macy's and Bloomingdale's stores, and Dillard's (DDS). Now at $23, Macy's is apt to fall to $18 as Yared expects 2009 earnings to drop to $1.70 a share.

I would like to add few homebuilder stocks (CTX, LEN, RYL, PHM), credit related (COF, DFS), retailer (NILE, BIG, MW), transport (YRCW) to the list. Infact all of the above make good short sale.

US Home Prices In 2009

Bloomberg has a story about Greenspan's take on US home prices: Greenspan Says U.S. Home Prices May Stabilize in 2009

Former Federal Reserve Chairman Alan Greenspan said the drop in U.S. home prices will probably end well before early next year as the number of houses on the market diminishes, aiding an economic rebound.

It will not be until early 2009 that we will get close to having eliminated most of this home inventory, Greenspan told a conference in Tokyo today sponsored by Deutsche Bank AG and co-hosted by Bloomberg LP. But it is very likely that home prices will stabilize well before that.

Greenspan added that the extent of damage stemming from the collapse of the subprime-mortgage market won't be known for months. He described the credit crisis as the worst in 50 years, echoing the assessment of International Monetary Fund economists. Once the markets start to stabilize, especially if the real economies don't go into a severe recession, then we can expect a recovery to begin to take place, Greenspan, 82, said via satellite from Washington. It will be slow, it will be hesitant. The health of the U.S. housing market is tied to broader financial markets that rely on bundling mortgages to sell as securities, Greenspan said.

The median price of an existing single-family home dropped 8.7 percent in February from a year earlier, the most in four decades of record keeping, according to the Chicago-based National Association of Realtors. Have we reached a point where prices are stable? We cannot know that for a couple of months, Greenspan said. It looks as though we're going to get a very large rate of liquidation, but not until the second half of this year. Greenspan said inflation will be contained during the current slowdown before picking up as the world economy recovers. It's difficult to imagine any major breakout of inflation as economic slack continues to increase, he said. What we will see is gradually rising inflationary pressures that will probably be subdued during the current period of slack, but that will surely reemerge when economies pick up.

I personally do not feel the housing problem will be resolved so soon. With drop in new home sales, existing home sales, high foreclosures and job losses the inventory will take more time to be consumed.

How 200 DMA Makes A Difference

By TradingMarkets Research

Up 10% or more in the past few days may be a great way to start the week, but moves like that can be great ways to start a reversal, as well.

We examined millions and millions of simulated stock trades between 1995 and 2007 with the goal of better understanding short term stock behavior. Is it better to buy breakouts or pullbacks? Is it better to buy a stock that has rallied over the past few days or a stock that has fallen for the past several sessions? Which is truly more bullish: stocks that are making higher highs or stocks that are making lower lows?

What we found out may surprise you. Most importantly, we found out that context is key. Stocks trading above the 200-day moving average tend to act very differently from stocks that are trading below the 200-day moving average. In fact, just about everything that can be said about stocks should be filtered through this one primary lens: is the stock in question above or below the 200-day moving average?

We believe that this is always the first and more important question every short term stock trader should ask him or herself. This is because the answer to that question is what lets us know whether or not a breakout is a good thing or a bad thing, whether or not higher highs are truly meaningful and bullish for a stock, and whether a big rally is prelude to a significant advance or potentially just a set-up for a fall.

Consider the five stocks in today's report. All five stocks have had significant price increases over the past five days, increases to the tune of 10% or more. While this could easily be seen as a very bullish development, the problem with these advances is that they have occurred as the stocks have traded below the 200-day moving average.

While some stocks that rally big while under the 200-day moving average will ultimate rally above that level, our research indicates that the edge over time for the short term trader is in betting that these stocks will not remain strong and, instead, will under perform the average stock over the next one-day, two-day and one-week time frames.

Although we conducted research on a staggering number of simulated stock trades in order to reach these conclusions, these conclusions to have more than a whiff of common sense to them. For one, stocks that are trading below their 200-day moving averages have full true patrons. There are value investors trying to scoop up bargains, and a few traders looking to strike it big with lottery bets on stocks that have declined in price, but the rallies that stocks below their 200-day moving averages tend to produce on average are weak and unreliable ones indeed. As such, they are best avoided or when the circumstances are opportune-sold short.

A second point is that many of these stocks are held by longer term investors who, having held on to these stocks all the way down, are more than eager to sell them after the slightest advance. An investor who sees his or her stock fall from $45 to $15 will break land speed records to sell if that $15 stock bounces a few dollars, taking just a little bit of the sting out of the losing trade.

Short term traders want to position themselves on the right side of such situations. By selling stocks that make this bounce, traders can take advantage of the selling that often swiftly appears just as these stocks appear to be finally making progress to the upside.

(Source: TradingMarkets.com)

Weekend Webinar

Interesting technical analysis by Michael Oscar.

When Psychology Changes, News Changes

Elliotwave blog has a story about how when psychology changes, news changes: When Psychology Changes, News Changes

When collective psychology changes, coverage of the news changes with it.

I realize how that statement can be understood in at least two ways, so let's get specific. Am I talking about "changes" in

a) how news will be covered, or
b) the version of news that has been covered already?

My answer is: Both. Which is to say, psychology can and often does change everything. In the case of changing the version of news that has been covered already, the most obvious recent example is the Federal Reserve's bailout of Bear Stearns, which was engineered during the weekend of March 15-16.

You may remember some of the particulars from the news at that time -- the sense of fear was palpable, as print and broadcast media were full of stories that speculated about which big bank "might fail next" and "how much worse this will get." Bear Stearns was so reckless in its subprime lending that bankruptcy was at hand, and the firm's chairman was away at a bridge tournament when the crisis turned critical; J.P. Morgan had agreed to the "buyout" of Bear for $2 per share, and was widely lauded both for helping the economy at a critical moment and negotiating a good deal for itself; the Fed was even more widely lauded for "doing what it had to do" to "restore confidence" in the markets and "avoid a sudden market-shaking crash."

Stubborn traders who are highly leveraged but on the right side of the fundamentals sometimes get burned trying to fight the short term reversal of the market sentiment/psychology. Traders should always give themselves enough time to safeguard themselves against short term market reversals.

Weekly Economic Calendar

Monday: Consumer Credit (3 p.m.)

• The dollar value of consumer installment credit outstanding. Changes in consumer credit indicate the state of consumer finances and portend future spending patterns.

Tuesday: Chain Store Sales (7:45 a.m.), Retail Sales (8:55 a.m.), Pending Home Sales (10 a.m.), FOMC Minutes (2 p.m.), Consumer Confidence (5 p.m.)

• This weekly measure of comparable store sales at major retail chains, published by the International Council of Shopping Centers, is related to the general merchandise portion of retail sales. It accounts for roughly 10 percent of total retail sales.
• The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. As such, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.
• On December 14, 2004, the Federal Open Market Committee announced that they would release the minutes of each meeting with a three week lag. This is a vast improvement from the previous release of the minutes which ranged from a six to eight week lag. While the FOMC releases a statement after each meeting which describes the policy action (or inaction), the minutes generate a lot of attention in the financial markets because they reveal more details on the discussion of the most recent FOMC meeting.

Wednesday: Mortgage Refinancing Index (7 a.m.), Wholesale Trade (10 a.m.)

• The Mortgage Bankers' Association compiles various mortgage loan indexes. The purchase applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
• Wholesale trade measures the dollar value of sales made and inventories held by merchant wholesalers. It is a component of business sales and inventories.

Thursday: Initial Job Claims (8:30 a.m.), Trade Balance (8: 30 a.m.), Business Barometer (10 a.m.)

• New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smoothes out weekly volatility.
• The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production.

Friday: Import Prices (8: 30 a.m.), Univ. of Mich. Sentiment Index (10 a.m.)

• Indexes are compiled for the prices of goods that are bought in the United States but produced abroad and the prices of goods sold abroad but produced domestically. These prices indicate inflationary trends in internationally traded products.
• The University of Michigan's Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending. Consumer confidence and consumer sentiment are two ways of talking about consumer attitudes. Among economic reports, consumer sentiment refers to the Michigan survey while consumer confidence refers to The Conference Board's survey.

(Source: Bloomberg)

Employment Situation: Why Do Investors Care

The employment situation is a set of labor market indicators. The unemployment rate measures the number of unemployed as a percentage of the labor force. Nonfarm payroll employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The average workweek reflects the number of hours worked in the nonfarm sector. Average hourly earnings reveal the basic hourly rate for major industries as indicated in nonfarm payrolls. (Bureau of Labor Statistics, U.S. Department of Labor)

Why Do Investors Care?
If ever there was an economic report that can move the markets, this is it! The anticipation on Wall Street each month is palpable, the reactions are dramatic, and the information for investors is invaluable. By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.

The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.

The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.

By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.

Current Employment Situation
Workers' pink slips stacked ever higher in March as jittery employers slashed 80,000 jobs, the most in five years, and the national unemployment rate climbed to 5.1 percent. Job losses are nearing the staggering level of a quarter-million this year in just three months.

For the third month in a row total U.S. employment rolls shrank often a telltale sign that the economy has jolted dangerously into reverse. At the same time, the jobless rate rose three-tenths of a percentage point, a sharp increase usually associated with times of deep economic stress.

Job losses were widespread last month, hitting workers at factories, construction companies, retailers, banks, real-estate firms and even temporary-help agencies. Also mortgage brokers, hotels, computer design shops, accounting firms, architecture and engineering companies, legal services, airlines and other transportation as well as telecommunications companies. Those cuts swamped employment gains elsewhere, including at hospitals and other heath-care sites, educational services, child day-care providers, bars and restaurants, insurance companies, museums, zoos and parks. And the government, which is almost always up. In fact, private employers have shed jobs for four straight months, though December showed an overall gain for the economy because the government increase outweighed the private loss.

March's losses were the most since the same month in 2003, when companies were still struggling to recover from the last recession. The economy now has lost 232,000 jobs in the first three months of this year. The new employment figures were much weaker than economists were expecting. They were anticipating a drop of 50,000 payroll jobs.

Workers with jobs saw modest wage gains. Average hourly earnings for jobholders rose to $17.86 in March and are up 3.6 percent over the past 12 months. With lofty energy and food prices, workers may feel like their paychecks are shrinking. If the job market continues to falter, wage growth probably will slow, too, making consumers even less inclined to spend, which would further hurt the economy.

(Source: Bloomberg, Yahoo Finance)

Buzz Around This Week...

• Employers in U.S. Cut 80,000 Jobs, More Than Estimated; Jobless Rate 5.1% (Bloomberg)
• Lenders Swamped By Foreclosures Let Homeowners Stay (Bloomberg)
• If Recession Is Finally Here, Just How Bad Will It Be? (CNBC)
• Cramer Makes Sense For A Change (CNBC)
• Lehman sees banks, others writing down $400 billion (CNBC)
• How to Predict How Far Home Prices Will Fall (CNBC)
• Local office vacancy rate skyrockets (The San Diego Union Tribune)
• Microsoft Gives Yahoo Deadline, Signals Lower Bid (Bloomberg)
• Bankruptcies Jump 30% in March, Led by Housing-Bust States (Bloomberg)
• Strip-Mall Vacancy Rate Is Lowest in 12 Years (CNBC)
  
• The day $2 billion walked out the door (Fortune)
• The Mortgage Bust Goes Global (NYTimes)
  
• Wall Street undergoes big mood change (BusinessWeek)