Mad Money host Jim Cramer shares his final thoughts of the day on the weak performances by UPS and McDonald's last quarter.» Read More
Last week I was reading plenty of research advising of compelling equity valuations. You know the skit. At these levels of profitability price/earnings ratios should be 18-times rather than 11-times and if you like the company at 18 then you should love it at 11.
A stimulus package is a big topic on the Street today after House Majority leader Steny Hoyer said a stimulus package could be law within a month. Senator Charles Schumer, speaking with our Erin Burnett, said it could involve:
Stocks are rallying modestly off their mid-morning lows on several events: 1) Stimulus package talk--A stimulus package is a big topic on the Street today after House Majority leader Steny Hoyer said a stimulus package could be law within a month.
The obsession with trying to call a bottom is based on a very real historical fact: Slowdowns in the economy -- call it recessions if you want to -- are invariably followed by rallies. Big rallies.
With the Intel disappointment, S&P futures are trading below August lows and we are now certain to see the S&P 500 -- but not the Dow -- trade at 52-week lows.
Here is just a quick look at what you can expect in Wednesday's markets. Consumer inflation data and earnings news will help set the tone after Tuesday's rocky market. Before the bell earnings are expected from J.P. Morgan and Wells Fargo.
Who's making money today? The shorts, in fact some of them are getting positively bold. The big movers are Exchange Traded Funds (ETFs) that specialize in Ultrashort positions--that is, as the indexes behind these stocks go down, say, 5 percent, these UltraShort funds GAIN 10 percent--twice the inverse.
Anecdotal evidence that the U.S. consumer's marathon spending spree may be slowing to a trot increases daily. By some measures, the U.S. consumer makes up about 19 percent of the world economy and 70 percent of the U.S. economy, so the health of American consumption is key.
Major indices are again at important technical levels. The small-cap Russell 2000 is again at 52-week low; and if we close here the Dow Industrials and the S&P 500 will both be at 10-month lows. The problem is principally with Citi and the realization that the bottom is not in. The equation here is simple: no "kitchen sink" quarter + consumer deteriorating = stock dead in water.
Retail sales a clear disappointment, dropped futures even more, only good news is Fed has even more room to ease here. Citigroup reported a fourth quarter loss of $1.99, $1.03 expected. Losses were driven by write-downs (of $17.4 billion) and losses in subprime, and an increase in credit costs of $5.4 billion in the consumer loan portfolio (more signs that the consumer is slowing down).
Important economic data will compete with Citigroup's much-anticipated earnings report ahead of Tuesday's opening bell. Retail sales data is being particularly watched to see if it is weak enough to prompt the Fed to cut rates even before its regular meeting at the end of the month.
The idea that financials are close to a turning point has been percolating for several weeks. But word that Citigroup could take a massive writedown when it releases earnings tomorrow has added fuel to the theory the group may be closing in on a bottom.
Several interesting strategist/analyst calls this morning, all trying to pick a bottom: 1) Credit Suisse recommending an overweight in U.S. stocks because the Fed is likely to cut rates to respond to the slowing economy quicker than their European counterparts.
The haves and have nots this earnings period could come down to who has the biggest foreign exposure. Look what happened with IBM today. The weak dollar is its friend.
Is the U.S. market getting beaten-up enough to get interesting? Strategists at Credit Suisse seems to think so. They are recommending a 5 percent overweight in U.S. stocks because the Fed is likely to cut rates to respond to the slowing economy quicker than their European counterparts.
The play book for stocks in the week ahead will be written in corporate earnings reports, but the longer term wins and losses for the market will be decided by the Fed.
A change in sentiment? This week saw interesting rotation in the markets. Beaten up financials were looking for a bottom, with the largest ones up for the week. Retailers showed no signs of bottoming, most of the large ones at 52-week lows. Ditto for restaurants.
Quarterly reports next week from Citi, JP Morgan, Washington Mutual, Wells Fargo, Comerica, Merrill Lynch, PNC. There are plenty looking to go long after the reports are out, based on valuation. For example, Citi and Wells Fargo are trading in the bottom 10 percent of their historical valuation.
The Bank of America-Countrywide deal is less than two hours old, and already the cynics are out. It's a government-approved bailout, cynics say. It's a government conspiracy to keep the market up, cynics say. Things look like they are worse than appears at Countrywide and BofA gets a deal in the long term, they say.
Reports of more writedowns at Merrill Lynch and credit wrinkles at American Express are outweighing the relief that Bank of America is swooping in to buy troubled Countrywide.