Wang’s Happy Trading

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From Briefing.com

Periodicals Wrap-Up for Monday, November 10th
WALL STREET JOURNAL: According to people familiar with the matter, the Wall Street Journal reported that the U.S. government has reached a deal to replace its original $123B bailout of American International (AIG) with a new $150B package…FINANCIAL TIMES: The Financial Times reported that as Wall Street banks look to cut costs, the financial industry is preparing for a new round of job cuts. Executives and analysts believe the redundancies could be more than 70,000 among U.S. banks alone in addition to the 150,000 jobs already lost worldwide in the financial sector. Investment bankers and traders are expected to be hardest hit by the new round of job cuts…VARIETY: Ahead of its earnings report, Variety reported that Lionsgate (LGF) is slated to cut 41 positions, or 8% of its staff. The cuts are across all divisions but almost all are at the Santa Monica headquarters…THE STANDARD: Sources said that Hongkong and Shanghai Banking Corp, the Asian arm of HSBC Holdings (HBC) may lay off nearly 600 employees to survive the worsening economy. The Standard reported that the private banking and insurance sector will not be affected and the consumer banking and information technology sectors will be the hardest hit…

CME Group faces “futute shock”-Crains
As congress weighs vast reforms in financial, oversight the CME Group (CME) faces a different regulatory landscape “I don’t think that anybody expects that we can maintain the status quo,” says John Damgard, president of the Washington, D.C.-based Futures Industry Assn. “There’s a tsunami out there, and we are going to get swept up in it.”

Solar Stocks: volatility persists - Barron’s
Technology Trader columnist Eric Savitz talks about the volatility of Solar stocks lately. Heading into the election, the stocks staged a multi-day rally that lifted some by 60% or more. But in the post-election period, the stocks have resumed tumbling, giving back a good portion of their recent gains. A stronger dollar is badly hurting revenue and profits at solar companies that source products in the U.S. or China but price them in euros. Meanwhile, the credit crunch has made it almost impossible to finance solar projects. And now there are reports that spot-market prices for polysilicon are collapsing, pressuring prices for both solar cells and modules. In short, the solar industry is at serious risk of experiencing reduced demand at the very moment that supply is expanding. Savitz says that’s not a good combination.

Plugged In: Yahoo’s next move? - Barron’s
Struggling Yahoo! (YHOO) last week company had its two most obvious options taken away. First, Google (GOOG) pulled out of their advertising outsourcing deal, which was almost certain to be blocked by the Justice Department. And secondly, speaking in San Francisco Wednesday, Yhoo!’s Yang said that he’d sell at the right price, whatever that is. But Friday morning, Microsoft (MSFT) CEO Steve Ballmer blew a hole in that theory, saying he’s not interested in making a new bid. Columnist Eric Savitz says, that if he were Ballmer, he’d sit on his hands and wait for Yahoo! to drop even further in the face of an obvious lack of strategic alternatives and crumbling financial performance. He might not bid with the stock at $12, but what about at $8? Savitz speculates that at some point, at a lower stock price, Ballmer could jump in with an offer for Yahoo!. Savitz also puts the idea out there that Yahoo! could still sell its Asian assets and buy back stock, and it could rejuvenate investor interest by tossing out Yang and President Sue Decker in favor of a new management duo.

Technology Trader: Buying Cisco on bad news - Barron’s
Columnist Eric Savitz patted himself on the back for last week’s recommendation that investors listen to the Cisco Systems (CSCO) earnings conference call. Savitz says, the most significant development for tech investors last week was that call. Analysts in the days before the call had trimmed expectations for revenue growth to 3% or so. Still, Cisco came up with a shocker: The company now sees revenue in the January quarter down 5%-10%. More alarming was the 8% drop in enterprise orders and the 11% slide for the U.S. enterprise sector. Chambers said weakness that began in the U.S. a year ago has spread around the globe: to Europe, then to the developing markets and, most recently, to Asia. On Thursday, the day after the forecast, Cisco fell a relatively modest 2.6%, better than the 4.3% drop by the Nasdaq Composite and the 4.9% slide by the DJIA. Savitz said, in an odd turn of events, Cisco’s dismal guidance gave an excuse for investors to sell shares of tech (and everything else), but Cisco stock itself was relatively unaffected. For the short and long run, Savitz questions whether investor would rather own Cisco, or a basket enterprise networking stocks consisting of Alcatel-Lucent (ALU), Nortel (NT) and Ericsson (ERIC)? Cisco has already lost 37% of its value this year; the stock trades for under 11x FY09 EPS, and it has close to $27B in cash, more than a quarter of its current market cap of about $100B. Savitz says, the most amazing thing about that terrible outlook Cisco provided is that many investors decided to step up, buy the stock and stash it away.

A stronger dollar is Europe’s friend - Barron’s
Goldman Sachs estimates that a 10% drop in the euro versus the dollar translates into a profit rise of about 6% for European concerns, although that percentage could be somewhat lower amid a global economic slowdown. The euro has dropped to around $1.28 from a July peak of $1.60, a decline of about 19%. The dollar’s rise against the euro benefits some European companies and hurts others. These large-cap stocks historically have been among the most likely to rally on dollar strength….. Novartis (NVS), GlaxoSmithKline (GSK), AstraZeneca (AZN), Roche Holding (RHHBY), Nestl� (NSRGY), Reckitt Benckiser (RBGPF), Diageo (DEO), KPN (KPN.Netherlands), Union Fenosa (UNF.Spain); — while these stocks have been among the most likely to fall. So far, the dollar has rallied about 24% against the euro since mid-July… Xstrata (XTA.L), Rio Tinto (RTP), BASF (BASFY), BHP billiton (BHP), InBev (INB.VX), Telenor (TELNY), ThyssenKrupp (TKA.Germany), Bouygues (EN.France), Anglo American (AAL.UK). Also, with oil down sharply since July, big energy producers such as BP (BP) and Royal Dutch Shell (RDSA, RDSB) could be contrarian dollar plays. France’s Total (TOT) is another potential beneficiary of a stronger U.S. currency.

Sectors likely to be helped, or hurt — under Obama - Barron’s
Until the market decides if President elect Barack Obama is good or bad for stocks, and to what degree, volatility is apt to be the norm. Stuart Schweitzer, global market strategist for the JPMorgan Private Bank in NY, predicts big swings in both directions, and well into 2009. Now with the election behind us, investors are questioning which stocks/industries will be winners or losers under an Obama administration. [LOSERS] Banks, brokerages and other financial concerns, already pummeled this year, could take even more of a beating under Obama, many pundits say. Even so, financial stocks are getting so cheap that they’ll be hard to resist. Many analysts include the defense sector in their loser’s column because key Hill Democrats have been threatening to whack the defense budget. However, Defense stocks may be oversold, specifically Raytheon (RTN), Lockheed Martin (LMT) and Northrop Grumman (NOC). Because Obama supports a carbon cap-and-trade system to curb greenhouse gases, U.S. utilities could move away from coal to alternatives like natural gas, eventually it could hurt coal producers like Peabody Energy (BTU) and Massey Energy (MEE). Drug companies could take some big hits as Democrats struggle to hammer out a workable universal-health-care scheme. Pfizer (PFE) and GlaxoSmithKline (GSK) both fell 8% the day after the election. Infrastructure stocks are trickier as some warn against buying an industry group like steel, which has been battered by the economy, on the hope that some massive government infrastructure-spending plan would turn it around. Shares of United States Steel (X) are down 72% so far this year. [WINNERS] Alternative Energy: Obama promised to help reduce the nation’s dependence on foreign oil. Jens Peers, a portfolio manager of the alternative-energy funds for KBC Asset Mgmt., likes Vestas Wind Systems (VWDRY) and MEMC Electronic Materials (WFR). Autos: Obama has committed to rescuing the U.S. auto industry. But investors should be wary of assuming the best case and scooping up the bonds of these companies, despite their double-digit yields. There could be some winners in health care. Douglas Cliggott, who co-manages the Dover Long/Short Sector Fund, thinks generic drug maker Teva Pharmaceutical (TEVA) could benefit from any assault on drug pricing. And the CEO of Humana (HUM), has said that his company can benefit by bringing technology systems and other efficiencies to the insurance market. Medco Health Solutions (MHS) and Express Scripts (ESRX) also could benefit, as each offers pharmacy-benefits services.

Are we in the midst of the greatest commodities bull market? - Barron’s
Barron’s interviewed Donald Coxe, the Global Portfolio Strategist at BMO Financial Group. Coxe has helped his followers anticipate some of the biggest shifts in markets, be they in stocks or commodities. He now sees real hope for two sectors that have been taking poundings: banks and commodities. Coxe remains convinced that we are in the midst of the greatest commodities bull market of all time. Coxe says, if you aren’t deeply in the equity market, this is not a time to be committing large amounts of money. Stocks are cheap but they can get cheaper. Some Coxe’s favorite stocks are trading at low P/Es, they are the fertilizer, oil and agricultural companies. He said, the gigantic investment returns are all going to be tied to companies that meet real human needs and do it better than other companies. Coxe said the biggest commodity story is going to be food, bigger than the other ones. It is high-protein food. The way to play that is through the fertilizer stocks, the genetically modified seed stocks and the farm-equipment stocks. Coxe would not recommend specific companies, citing his firms compliance restrictions. Commodity groups that Coxe likes best are: agriculture first, as we will need more fertilizer. He says, CNH Global (CNH) is one of the top three companies in the world in the field. Coxe says, the next group has to be gold stocks. A period of massive reflation always leads to a good move in gold. The third group is energy. Despite Obama’s plan to spend $150B on alternative energy, each year we still lose 4.5M barrels of oil a day, which Coxe says we will have to replace. He says these stocks are selling for pennies on the dollar. Coxe notes BHP Billiton (BHP), which has an unrivaled set of assets, a great balance sheet, top-notch management and no scandals. Coxe says copper is also worth a look. Copper is now at $1.80 per pound, where it was in 2005. But as soon as the economy recovers, copper always doubles in price. It’s levered to growth in China and India.

Weekly additions to the Investors Business Daily-100
The following are additions to the Investors Business Daily-100 list for the week of November 7 : Compass Minerals (CMP), Ebix (EBIX), Knight Capital Group (NITE), World Fuel Services Corp. (INT), Rock Tenn Co (RKT), Somanetics (SMTS), AAON Inc (AAON), Marvel Entertainment (MVL), Quidel Corp (QDEL), South Jersey Industries (SJI), Sunoco Logistics (SXL), Chemed Corp. (CHE), Genesee & Wyoming (GWR), Baxter International (BAX), Argon St. (STST), Balchem Corp (BCPC), Apollo Group (APOL), Myriad Genetics (MYGN), Covanta Holdings (CVA), Chevron Corp (CVX), Capella Education (CPLA), Exponent Inc (EXPO), Signature Bank (SBNY), Immucor (BLUD), Franklin Electric (FELE), BJS Wholesale Club (BJ)

Weekly subtractions from the Investor’s Business Daily-100
The following are subtractions from the Investors Business Daily-100 list for the week of November 7: Syniverse Holdings (SVR), New Orientl Edu & Tech (EDU), NVE Corp (NVEC), Cash America International (CSH), Big Lots (BIG), Standard Parking Corp (STAN), Perrigo (PRGO), Union Pacific (UNP), Cellcom Israel (CEL), Church & Dwight (CHD), Children’s Place Retail (PLCE), Woodward Governor (WGOV), Elbit Systems (ESLT), MWI Veterinary Supply (MWIV), Ross Stores (ROST), Autozone (AZO), Hawaiin Electric Industries (HE), SWS Group (SWS), Cass Information System (CASS), Merit Medical Systems (MMSI), Microsemi Corp (MSCC), El Paso Electric (EE), Heico Corp. (HEI ), Fastenal (FAST), Meridian Bioscience (VIVO), Shanda Interacactive (SNDA)

U.S. gives new bailout deal to AIG-WSJ
AIG’s $123B bailout from the U.S. government has been replaced with a $150B deal, reports the Wall Street Journal. The main thrust of the package is to ease terms, but it also increases the government’s role in the financial markets. The $150B includes a $60B loan, a $40B preferred-stock investment and $50B in capital to mostly buy distressed assets. More information is expected today as AIG reports its third quarter earnings.

Citigroup negotiating purchase of a regional bank-WSJ
Citigroup (C) is in talks to buy a regional bank whose name has not been revealed, reports the Wall Street Journal, and a deal could be concluded this month. It is thought to be a bank that overlaps with Citi’s retail banking unit.

China announces $586B stimulus package-WSJ
China’s two year $586 economic stimulus package equates to about 16% of China’s 2007 economic output. The immediate result was a rally for Asian stocks. The plan will focus on housing and infrastructure, agriculture, health care and social welfare. There’s also a tax deduction for capital spending by companies.

Bin Laden may be planning massive attack against the U.S.-NTARC
The National Terror Alert Response Center is reporting that Osama bin Laden and al-Qaeda may be planning a massive terror attack against the U.S. that will “outdo by far” the 9/11 attacks.The report cites the Arab newspaper Al-Quds Al-Arabi in London.

U.S. equity futures point to a higher open
U.S. stocks continue to point to a higher open. The averages are currently pointing to a more than 2% gain at the open. Although the impetus for the move is the massive stimulus package in China, the strength can also be attributed to the additional U.S. government funds which were promised to insurance giant AIG (AIG). The government said they would provide an additional $40B to the company in return for partial ownership. The shares of AIG are currently higher by 23% in premarket trading.

Analysts Downgrade Summary for Monday, November 10th
MOST NOTEWORTHY: General Motors (GM), LandAmerica (LFG) and solar companies were today’s noteworthy downgrades: Barclays downgraded General Motors to Underweight from Equal Weight on cash concerns and believes any assistance from the government would substantially dilute equity holders. Barclays set a $1 target on GM shares. Stephens cut LandAmerica to Underweight from Equal Weight following the Fidelity National (FNF) takeover as they expect no other bidders to emerge and believe shares could go back to under $5 if Fidelity National walks away. Deutsche Bank downgraded solar companies to reflect deteriorating fundamentals in the sector, an adequate supply of c-Si modules, the strengthening dollar and restricted access to capital. First Solar (FSLR), Canadian Solar (CSIQ), Energy Conversion (ENER) and Sunpower (SPWRA) were downgraded to Hold from Buy…OTHER DOWNGRADES: Urban Outfitters (URBN) and Aeropostale (ARO) were downgraded to Underweight from Equal Weight at Barclays. FMC Technologies (FTI) was lowered to Underweight from Neutral at JP Morgan.

Analysts Initiation Summary for Monday, November 10th
MOST NOTEWORTHY: Freeport McMoRan (FCX), HLS Systems (HOLI) and Kimberly Clark (KMB) were today’s noteworthy initiations: Banc of America expects Freeport McMoRan’s earnings will decline sharply in 2009 and thinks the dividend could be at risk. Shares were initiated with a Neutral rating and $29 target. Roth Capital initiated HLS Systems with a Buy rating and $5 target. The firm is positive on the company’s management team and the company’s outlook for EPS growth. Citigroup thinks Kimberly Clark’s margins have bottomed and that the current valuation is too low. Shares were assumed with a Buy rating and $65 target…OTHER INITIATIONS: Synaptics (SYNA) and Intercontinental Exchange (ICE) were initiated at Merrill Lynch with Neutral ratings. Tim Hortons (THI) was assumed with a Sell rating at Goldman.

Analysts Upgrade Summary for Monday, November 10th
MOST NOTEWORTHY: Smith & Wesson (SWHC), Wells Fargo (WFC) and Coca-Cola Enterprises (CCE) were today’s noteworthy upgrades: Merriman upgraded Smith & Wesson to Buy from Neutral on valuation after channel checks indicated an increase in gun sales in October after an Obama win became apparent. The firm believes shares can trade up into the $4 to $5 range. Credit Suisse upgraded Wells Fargo to Outperform from Neutral citing the company’s improved balance and potential earnings power following its $11B equity offering. JP Morgan upgraded Coca-Cola Enterprises to Overweight from Neutral on valuation and easing commodity and labor costs…OTHER UPGRADES: Manulife (MFC) was raised to Outperform from Sector Perform at RBC Capital. SL Green Realty (SLG) was upgraded at UBS to Buy from Neutral Molina Healthcare (MOH) was upgraded to Equal Weight from Underweight at Barclays.

Jim Cramer’s “Mad Money”
Cramer on Friday’s show interviewed Eric Schmidt, chair/CEO of Google (GOOG) to get his insights on President-elect Barack Obama’s economic advisory board. Schmidt, an advisor, characterized Obama as someone who listens carefully and is prepared to act quickly to address the crisis head on. Schmidt outlined what he called “Google’s energy plan,” which like Obama’s plan, focuses on using wind, solar, and geothermal energy to achieve energy independence. Schmidt took issue with much of the financial bailout packages, noting they did little for taxpayers. He said that he has no intentions to leave his job for the post of chief technology officer in the new administration. Lastly, Schmidt said he expects advertising spending to rebound quickly and sees exciting opportunities ahead for Google. Cramer again urged investors to stick with high yielding dividend stocks like: Analog Devices (ADI) and Intel (INTC), Kimberly-Clark (KMB) and Kraft (KFT). In the utility sector, Cramer reiterated a buy for Duke Energy (DUK), and he likes industrial electronics makers Emerson Electric (EMR) and Ingersoll-Rand (IR). As part of his “Invest in America” series, Cramer said Verizon (VZ), with its 6.1% yield, should be a part of investors’ portfolios. He welcomed Ivan Seidenberg, Verizon’s chair/CEO to the show. Seidenberg said the Alltel deal takes Verizon to more than 80M wireless customers, increases coverage in several under-served areas, and allows the company to better penetrate markets across the country. He said the deal represents $9B in net present value to Verizon. Seidenberg said there are enormous growth opportunities in the company’s burgeoning FiOS Internet and TV network. Seidenberg also cited the company’s talks with Microsoft (MSFT) and Google (GOOG) over the company’s future wireless platforms and text messaging business. Next, Cramer welcomed Herbalife (HLF) chair/CEO Michael Johnson. He said the earnings forecasts were trimmed primarily because of the strong dollar, volatility in the exchange markets that make it harder to forecast profits, and a 3% sales decline in Mexico. Johnson said the fundamentals at Herbalife remain strong, and the company’s 4% dividend yield is not in any jeopardy. Cramer said he’s confident that Herbalife, which has rebounded before, will do so again. LIGHTNING ROUND: (Bullish) CPL; MCD; YUM; WIN; PKG; WFC. (Bearish) MELI; WEN; C.

Fast Money Position recap- Seymour Owns (AAPL), (BAC), (F), (MER); Pete Najarian Owns (MSFT) And Is Short (MSFT) Calls; Pete Najarian Owns (CHK) Call Spread; Pete Najarian Owns (MBI) Put Spread; Pete Najarian Owns (YHOO) And Is Short (YHOO) Calls; Macke Owns (BNI), (DIS), (UUP), (MSFT), (WMT); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (NUE), (MSFT); Finerman’s Firm Owns (DNA) Call Spreads; Finerman’s Firm Owns (MSFT); Finerman’s Firm Is Short (USO), (IYR), (IJR), (MDY), (IWM), (USO), (SPY), (RTH); Finerman’s Firm Is Short (VNO)

Market looks strong from the China stimulus package. I see basic materials and energy outperforming in the short term but watch the fade this morning. FCX, POT, MOS, AGU, MOOs, X, energy, XLB, XLE, ANR, CLF, shippers, ACH, China infrastructure plays, JOYG, BUCY.