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.
Is it possible that the U.S. will finally outperform emerging markets in 2008?
1) IBM pushing futures up this morning; it’s up nearly 10 percent, pre-announcing a much better than expected earnings report. Will earn $2.80 for the quarter, 20 cents better than expected. CEO Palmisano cites "strong operational performance in Asia, Europe and emerging countries." Hewlett up 3 percent, Dell up 3 percent.
2) Searsdown 10 percent pre open; said same-store sales were down 3.5 percent in the holiday season, and lowered earnings guidance. The usual suspects: credit crunch, weak housing market.
3) Stereo equipment maker Harman International down 13 percent pre-open, saying portable navigation devices are experiencing significant pricing pressure.
4) Goldman out (again) pounding the table on a "mild recession" that they say will hit the U.S. mid-2008. Reducing earnings estimates on department stores (reduced 23 percent) and apparel manufactures (reduced 12 percent). Second half margin recovery could be jeopardized if retailers do not watch inventories. Downgrades Coach and Ralph Lauren , and cut Sears to sell. Continues to recommend Wal-Mart and Costco .
Even upgrades in retail have a sour tone. Credit Suisse upgraded the home improvement stocks today--Home Depot , Lowe's , Bed Bath and Beyond , but only grudgingly. Listen to this "upgrade:" "we are upgrading our ratings on the home improvement names but are doing it based on valuation and early cycle as opposed to any confidence that things will not get worse." Gee, thanks.
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