FMS, SAP, BAMXF, SI, BAYZF, SBGSY, LVMUY, PDRDY, ASML, LUX : Barron’s list of 10 Europe-based global powerhouses
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31Maybreaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, global economy, market analysis, market facts, trading, trading ideas, trend No Comments
Tags: ASML, BAMXF, Barron's list of 10 Europe-based global powerhouses, BAYZF, FMS, LUX, LVMUY, PDRDY, SAP, SBGSY, SI
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31MayFinancial transaction, Movers & Shakers, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, daily stock tips, daytrades, fed action, financial settlement, free stock info, global economy, market analysis, market facts, markets, short term investments, stockmarket analysis, stocks, trading, trading ideas, trend, usa economics No Comments
2010 The Worst May in a Half-Century
Assessing damage from the worst May since 1962.
THE STOCK MARKET SUFFERED its worst May in a half century, but there’s a bright side to the darkening mood: A 12.3% slide since late April and greatly diminished expectations mean any good economic news this summer might, once again, carry a jolt of surprise.Within a month, our focus has swung from convalescing corporate profits to Europe’s fiscal chaos and the drag on global economic growth. A 14-month rally without major setbacks has also swelled the throng of uneasy investors who were anticipating, quite rightly, a correction — and who were poised to sell.
.How worried have we become about global growth? A recent survey showed the huddle of bearish investors (51%) dwarfing the bulls (30%) by the biggest margin since last summer. Money managers lunging at options to protect their portfolios drove the VIX volatility index above the 40 threshold for just the sixth time ever — joining, in the panic hall of fame, the 1987 stock-market crash, the 1998 Russian financial crisis, the dot-com bubble collapse, the Sept. 11 attacks and the 2008 credit crunch.
For investors, the most pressing question now is how much damage is already factored into retreating stock prices. The market now trades at roughly 11 times what Standard & Poor’s 500 companies are expected to earn over the next two years — slightly below its 25-year average, but richer than the stricken 8 multiple when this bull market unfurled, in March 2009.
Morgan Stanley’s global strategist Gerard Minack thinks the market would have made “a reasonable allowance” of the downside risk to earnings at 10 times. That’s roughly 9% below the current level, and it assumes sovereign stress remains contained and economic data point to slower growth but no hard landing. “There is a risk the growth slowdown is more pronounced in 2011, but we doubt investors will see enough news to price in such a risk in, say, the next one to two quarters,” he notes. In other words, the S&P 500 at 1000 might have priced in the second half’s “probable” risks.
Last week, the S&P 500 dipped as low as 1041 before rebounding, and the swings were frequent and violent. An early plunge on Tuesday drew buyers, but Wednesday’s early rally was promptly sold. Thursday’s 3.3% surge, after China said it wasn’t bailing on European debt it held, fizzled Friday after a rating agency did something neither original nor startling: It downgraded Spain’s credit rating. Consumer spending was flat in April, Dreamworks Animation (ticker: DWA) drooped after the fourth installment of Shrek, which is one installment too many, disappointed at the box office, while Hugh Hefner showed you can’t have too many playmates and mansions — Playboy Enterprises’ (PLA) plan to open two clubs in Macau lifted partner Las Vegas Sands’ (LVS) shares 12%.
.The S&P 500 eked out a 2-point gain to finish the flip-floppy week up 0.2% at 1089. It is still 10.5% off its late-April high. The Dow Jones Industrial Average fell 57, or 0.6%, to 10,137. The Nasdaq Composite Index rallied 28, or 1.3%, to 2257, its second gain in three weeks, while the Russell 2000 added 12, or 1.9%, to 662. But European and Chinese stocks rebounded nearly 3%, both snagging their second gain in three weeks, while copper halted a four-week slide.
With U.S. markets closed Monday for Memorial Day, the S&P 500 will end this month down 8.2% — its worst May since 1962, and the biggest monthly slide since February 2009, just before this bull market began. The May losses totaled 7.9% for the Dow, 8.3% for the Nasdaq, and 7.7% for the Russell.
EMERGING MARKETS AREN’T immune if global growth sputters, but is the new world unfairly flogged for the old world’s budgetary sins? Before Thursday’s rebound, the MSCI Emerging Market iShares (EEM) were off 15% from their late-April peak, barely better than the 17% drubbing meted out to the MSCI EAFE iShares (EFA) that track developed markets. Have we swung so far from the abandoned notion of “decoupling” economies that we now expect all markets to be fused at the hip?
Emerging markets unencumbered by debt are struggling for other reasons: Some of their economic indicators are stalling, and the stronger dollar threatens their export-dependent economies. But if the looming global slowdown is to be blamed on developed countries’ fiscal wantonness, then emerging markets’ chaste balance sheets ought to offer some solace. China’s public debt, for example, is just 18% of its gross domestic product, compared with nearly 200% for Japan. In fact, emerging markets’ ratio of debt to GDP averages 37% — a fraction of the developed world’s 94%. Even Israel, the emerging nation with the highest debt-to-GDP ratio, 78%, has been plucked from those ranks and newly reclassified as a developed market.
Calling emerging markets “the baby getting thrown out with the bath water,” Bespoke Investment Group founder Paul Hickey listed a dozen American depositary shares of emerging-market companies whose charts look strong even after the recent correction. These include the Brazilian beverage company Companhia de Bebidas das Americas (ABV); Chinese Internet search company Baidu (BIDU); America Movil (AMX), a Mexico-based telecom giant; and Peruvian bank Credicorp (BAP).
Blame Europe: The old saw about selling in May and going away has never been so right, as fear of slowing global growth sent the Dow down 7.9% this month.
.With Europe hobbled and the U.S. humbled, emerging markets’ short-term fate may depend disproportionately on China. Ironically, trouble in Europe helps reduce the odds that China’s economy will overheat. In fact, the hit to global growth gives China’s central bank some breathing room in its crusade to tighten monetary policy, says Morgan Stanley’s China economist Qing Wang. The firm deems a hard landing in China in the foreseeable future “unlikely,” is overweight Chinese stocks, and continues to recommend developed world stocks that are exposed to emerging markets.ARGON ST, WHICH MAKES sensors for military intelligence, has been on the radar of big defense contractors ever since it hired financial advisers and reportedly began shopping itself to giants like Raytheon (RTN). and Boeing (BA). But the speculative frenzy has subsided a little, and the stock price has fallen more than 10%.
The decline can’t all be blamed on the market correction; the small defense intelligence specialist also reported underwhelming second-quarter earnings.
This takes Argon (STST) to an intriguing juncture: With shares near 24, down from their 2010 peak above 27, Oscar Gruss’ special situations analyst Bill Kavaler pegs the potential stock upside at $6 if a suitor surfaces, although shares could fall $2 if no deal is reached.
Argon shares aren’t cheap, and already fetch 21 times projected profits, but small contractors with proprietary know-how typically command a premium, and Argon’s multiple is still just shy of its median over the past five years. Although fiscal belt-tightening doesn’t bode well for defense budgets in general, Argon specializes in the kind of reconnaissance and surveillance technology that can help the leaner armies of tomorrow.
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30Maybreaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, trading, trading ideas, trend No Comments
Stockshakers stories moving the markets now
Euro steadies after Spain downgrade, stocks flat
Japan output nudges higher, seen slowing
Bernanke,Trichet see key emerging economies role
BP, Obama beset by growing Gulf spill frustration
Mideast sovereign funds eye AgBank IPO-report
Australia’s Healthscope gets 2 more bids
Mukesh Ambani in talks to buy India fund
Hitachi to pursue M&A, focus investments
France warns on credit rating, Germany on taxes
Pru seeks 10% price cut to save AIA deal-paper
Central America storm kills 86,more victims feared -
29MayMovers & Shakers, breaking stock market news, breaking stock news, daily stock picks, daily stock tips, free stock info, free stock picks, free stock tips, market analysis, market facts, market projections, markets, short term investments, stockmarket analysis, stocks, structured settlements, trading, trading ideas, usa economics No Comments
LULU, BIDU, NFLX, CMG, IDSA, MED, BOFI, DECK, DGIT, MELI, ULTA: IBD 100 Top 10 for the week of May 31
Tags: bidu, BOFI, CMG, DECK, DGIT, IBD 100 Top 10, IDSA, LULU, MED, MELI, NFLX, ULTA
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28MayLife settlement, Movers & Shakers, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, daily stock picks, daily stock tips, fed action, global economy, stocks, trading, trend, usa economics No Comments
Dow falls over 1 percent after Spain downgrade
^DJI 10,163.16 -95.83
NASDAQ 2,253.83 -23.85
NEW YORK (Reuters) - Stocks added to losses on Friday, pushing the Dow down more than 1 percent, after Fitch downgraded its rating of Spain.The Dow Jones industrial average (DJI:^DJI - News) was down 119.94 points, or 1.17 percent, at 10,139.05. The Standard & Poor’s 500 Index (^SPX - News) was down 15.13 points, or 1.37 percent, at 1,087.93. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 32.14 points, or 1.41 percent, at 2,245.54. The S&P 500 and the Nasdaq each fell more than 1 percent earlier in the day.
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28Maylong term investments, market analysis, market facts, market projections, markets, mutual funds, stockmarket analysis, trading, trading ideas, trend, usa economics No Comments
Should You Adjust Your 401(k) Now?
Increasingly, economists and stock market pundits are sounding the alarm over an imminent bear market.
• Economist Nouriel Roubini predicts that the Dow Jones Industrial Average will fall by 20%.
• Reuters financial blogger Felix Salmon offers a similar warning, telling investors that unless you’re a large institution, get out of the stock market right now. “Stocks are dangerous things to own,” writes Salmon. “We are entering an era of massive volatility. You, as an individual investor, just simply don’t have the risk appetite to be able to deal with that kind of volatility.”
• Economist and Dow Theory Letters author Richard Russell says this in a May 18 note about the stock market: “Do your friends a favor. Tell them to ‘batten down the hatches’ because there’s a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don’t need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won’t recognize the country. They’ll retort, ‘How the dickens does Russell know — who told him?’ Tell them the stock market told him.”Bad market mojo or not, it’s up to you to decide whether to move your 401(k) money out of the stock market and into the so-called safe haven of bonds. But consider these factors before you bail on the stock market and move into bonds.
What’s ‘Job One?’
Your overall goal is to protect your 401(k) nest egg — to a point. If you’re younger and have 20-30 years until retirement, you can likely absorb a big stock market hit. Historically, stocks have proven very elastic. They snap back significantly after big market declines (just like stocks did in 2009, when the Dow Jones Industrial Average snapped back by 50%; that after a 2008 performance where the DJIA fell by 35%). If you jump into bonds now, you could miss the rebound when stocks start climbing again.
Are You Experienced?
According to Hewitt Associates, only 16% of all U.S. 401(k) investors actually made a funds transfer in 2009. If the other 84% of 401(k) investors were in bonds, they missed out on a big year in the stock market. Hewitt has a reason for that “staying the course” mentality among 401(k) participants. “While it’s encouraging that most workers stayed the course throughout the market’s roller coaster fluctuations, most did so simply because they were disengaged with the retirement saving process or too paralyzed with fear and confusion to touch their 401(k) plans,” says Pamela Hess, Hewitt’s director of retirement research. “If employees continue to ignore their 401(k) plans, they’re hurting themselves by letting the market dictate their retirement strategy.”
What’s Your ‘Risk’ Factor?
There’s no law that says you have to sit idly by and watch your 401(k) proceeds erode due to a declining stock market. Let’s face facts: Stocks are riskier than bonds. If you can accept the historically lower returns from bonds, and it helps you sleep better at night, allocating more fixed-income products into your 401(k) may work for you. Your returns may be lower over the long-term, but so will your blood pressure.
Focus on Target-Date Funds
A Fidelity Investment study shows that investors who use target-date funds (often called “life cycle funds”) tend to see better performance from their 401(k) investments. Target-date funds automatically reset your 401(k)’s asset allocation based upon pre-determined criteria specific to your retirement needs. Most target-date fund strategies are based on age. So if you feel uncomfortable moving your money around on your own (but still want to avoid big stock market plunges) a target-date approach may take that weight off your shoulders — and still get you out of potentially big market messes.
More for Your Money
If you do opt to remain in stocks, one advantage you’ll get no matter what happens is you’ll be buying fund shares at lower prices (if the stock market continues to tumble). It’s simple economics — you buy low when prices are low, thus accumulating more 401(k) fund shares in the process. That said, you have to keep contributing to your 401(k) to reap the benefits of what stock market gurus call “dollar-cost averaging.”
Look for ‘Stable Value’
If you do move to bonds, consider stable value funds (which are mostly composed of fixed-income investments). Such funds offer a guaranteed minimum return and thus a little shelter from any stock market tsunamis — and they’re increasingly being used by 401(k) investors. During the last stock market meltdown of 2008 and early 2009, Prudential Investments reported that 26% of all its fund account assets came from stable asset funds in the second quarter of 2008. But by the first quarter of 2009, that number rose to 44%. As the stock market resumed strength, that number once again fell to 37% as more investors left fixed-income funds for stock funds.
When it comes to moving your 401(k) money out of stocks and into bonds, there are no crystal balls that tell you what’s going to happen.
Statistically, though, investors who keep their money in equities and ride out stock market storms usually make out better than those who hop from stocks to bonds when the financial weather gets rough.
Overall, it’s a personal choice and it’s yours to make. But use the tips above to increase your chances of making the right call.
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28Maybanking, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, fed action, money No Comments
US Money Supply Plummets
The U.S. M3 money supply, which reflects a wide array of bank accounts and is used as a leading economic indicator, has been posting big declines in past months that have been accelerating to a pace that mirrors that of the Great Depression, reports The Daily Telegraph. The M3 fell 9.6%, from $14.2 trillion to $13.6 trillion, in the three months to April as institutional money market funds plunged 37%, their largest drop on record, figures that International Monetary Research Professor Tim Congdon calls “frightening.” The expert blamed the steep decline on the fact that, “regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets,” adding, “This is why the US is not recovering properly.”Meanwhile, Larry Summers, President Barack Obama’s top economic adviser, has called for Congress to approve $200 billion of fresh stimulus aimed at boosting employment, prompting David Rosenberg of Gluskin Sheff to call the White House “freaked out about the possibility of a double-dip.” Congdon has called a second recessionary wave “a virtual certainty” if the money supply is not increased through quantitative easing. However, Federal Reserve Chairman Ben Bernanke does not consider the M3 to be a relevant indicator and the central bank stopped publishing the data five years ago on claims that it was too erratic. Paul Ashworth of Capital Economics sees both sides, and has voiced concerns over deflation if the drop becomes “entrenched,” although he advised against blind response to the data, as people may be removing money from accounts “to buy stocks, property, and other assets.”
Tags: US Money Supply Plummets
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BP’s top official upgrades impact of Gulf oil spill from “very modest” to “environmental catastrophe.”
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24Maybreaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, daily stock picks, daily stock tips, daytrades, free stock info, free stock picks, free stock tips, short term investments, stocks, trading, trading ideas No Comments
The IBD 100 Top Ten for the week
The following stocks are the IBD-100 Top Ten in ranking order for the week of May 17:Baidu (BIDU), Lululemon (LULU), Netflix (NFLX), Medifast (MED), Bofi Holding (BOFI), Deckers Outdoor (DECK), Ulta Salon (ULTA), Chipotle Mexican Grill (CMG), Industrial Services of America (IDSA), F5 Networks (FFIV)…
CHANGES: Industrial Services of America (IDSA) went from #4 to #9. China Automotive (CAAS) which was #6 last week is out of the IBD-100 -
24MayMovers & Shakers, banking, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, fed action, free stock tips, hedge fund, money, trading, trading ideas No Comments
Financial Reform Light has arrived
Banking industry lobbyists were popping the champagne bottles in Washington yesterday, as a greatly weakened and enfeebled financial reform bill stumbled across the finish line, coughing and wheezing all the way. It is, of course, a massive bill, which seems to leave no corner of the financial markets untouched, but I’ll give a few highlights.
Derivatives will move to public exchanges and be subjected to margin requirements. Insured banks cannot use their own capital for speculative trading. The SEC is getting into the credit rating business.
For me, the big one is SEC registration of hedge funds with either $100 million or $150 million in assets under management, depending how the slugfest in the conference committee works out. The bottom line: more regulation of everything bringing higher costs of doing business.
The most blatant regulatory weakness were addressed, but there is a definite “closing of the barn door after the horses have bolted” flavor to it. As I write this, teams of imaginative lawyers are drawing up the incorporation documents for special purpose entities to sidestep all of this. Water is like capital: it will always flow to the least regulated, highest return corners of the globe. You might as well try to make it illegal to buy low and sell high. The more things change, the more they remain the same.And don’t run out and buy bank shares because they dodged the bullet, no matter what John Paulson says. A possible double dip recession, another leg down in the real estate market bringing a secondary banking crisis make this a much higher risk bet than it appears.
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