Filed under: Forecasts, Next big thing, Economic data, Politics, Federal Reserve

With the stock market tanking, record gold prices, record oil prices, and the housing market in crisis, it’s not a shock that most Americans think a recession is coming in the next three to six months.

More than 45% of respondents to a survey conducted for Reuters by America’s Research Group said a recession was “somewhat likely,” while 14.3% thought it was “very likely.” Another 40% didn’t expect a recession at all.

Other highlights from the survey include:

• 46.8% of people who plan to spend more than $1,000 during the holiday season said nothing could make them spend less than they planned;
• People ware willing to pay more for U.S.-made toys; 66.9% said they wouldn’t buy Chinese-made toys;.
• 70% of respondents said they planned to purchase gift cards.

To recap, very rich people aren’t worried about the economy, but almost everyone else is. At least, that’s the case for now. Consumer confidence is a pretty slippery thing. Once someone loses faith that things are going to get better, it’s hard to get it back.

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Filed under: Television, Green Stocks

On last night’s MAD MONEY on CNBC, Jim Cramer made a review of “alternative energy stocks” he recommended earlier this year since his coverage of the green-tech picks back in April based upon a Massachusetts court ruling that was going to be a homerun for the sector. He gave a pretty large list that was in reality just a review of many stocks that benefit either directly or indirectly from “greener” movements. Here is the “full list” of his eight stocks he reviewed tonight, and there are several more from call-ins.

His Top Pick in the group is MEMC Electronic Materials, Inc. (NYSE: WFR) as it has an arms merchant business model for the solar market. It makes wafers for solar panels and is too good to pass up. He said it’s cheap and he thinks out of all green stocks that this one is still bargain.

You might want to know that MEMC already has a $16 billion market cap, but the forward growth rates in this part of its business are hard to argue against. This movement in “green” strategy has just recently helped the stock get back above levels seen in the late 1990’s. Keep in mind that this one also produces wafers for the global semiconductor industry, so it isn’t a pure-play in the sector. This one closed up big with the sector today at $74.74, but shares traded up 3% in after-hours after-hours trading to what will be a new high.

A couple of 24/7 Wall St. comments in the alternative energy area:

• An even more interesting analyst call in alternative energy today was where Lazard Capital called Capstone Turbine Corporation (NASDAQ: CPST) as a potential double to $2.50 per share. This one has been around forever and used to be considerably higher.
• If you want a more diversified play, you can always look at the best ETF in the sector: PowerShares WilderHill Clean Energy (AMEX: PBW).

Jon Ogg produces the Special Situation Investing Newsletter; he does not own individual stocks he covers.

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Filed under: Walt Disney (DIS), CIT Group (CIT), Federal Natl Mtge (FNM), Harrah’s Entertainment (HET), Washington Mutual (WM), Deere and Co (DE)

The markets moved significantly lower today as the dollar continued its free fall on news that China diversified its foreign currency holdings.

Over the last five years, the U.S. dollar has lost about 32% of its value compared to the euro (see chart below). What does this mean for you? Well, it means that 32% of the rise in the price of oil is due to the weak U.S. dollar. It means if you want to travel internationally, it is going to cost you about 1/3 more than it would have five years ago.

Some companies benefit from a weak U.S. dollar long term. Domestic agriculture like corn has been strong recently, and companies like Deere (NYSE: DE) that support agriculture benefit. Also, foreign tourists will find it more attractive to visit the United States as their euros will convert into more dollars. So Disney (NYSE: DIS) or Harrah’s (NYSE: HAS) Las Vegas casinos could benefit. A weak U.S. dollar helps jobs domestically, as any company that is exporting will find its goods cheaper for foreigners to buy. But all foreign goods are going to be more expensive for Americans to buy.

Continue reading Wednesday Market Rap: Weak dollar pounds U.S. stocks

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Filed under: Competitive strategy, Wal-Mart (WMT)

As I reported yesterday, Wal-Mart Stores, Inc. (NYSE: WMT) is in the process of arranging quite a few cuts in its purchasing and procurement divisions in the Southeast Asia region. The cuts are coming from Wal-Mart China operations and look to be a realignment of procurement positions to centralize the purchasing centers for a good portion of the retailer’s international operations.

But, is there more to it than that? The total headcount being cut in Wal-Mart’s global procurement division is close to 250 people, with many of them in the China area and surrounding vicinity (including Singapore and Shanghai). Is Wal-Mart pulling back on its potential focus of the Chinese market to more heavily concentrate on another international market with huge promise — India?

The case could certain be made for that point of view. And, with a new “Employment Contract Law” about to go into effect in China, this may be just a way around labor issues in the future for the retailer, something I suggested yesterday.

Continue reading Wal-Mart’s global procurement cuts raises labor practice questions

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Filed under: International markets, Other issues, Good news, Citigroup Inc. (C), Bank of New York (BK), Wachovia Corp (WB), Housing, Federal Reserve

U.S. Federal Reserve Open Market Committee Member William Poole Wednesday took the highly unusual step of specifying that the Fed will not raise interest rates at the Fed’s next meeting in December.

In a speech delivered Wednesday at Marquette University, Poole, a voting member of the FOMC, said, “When the Fed cuts its target for the federal funds rate, market participants know that the FOMC’s decision at its next meeting will be either to leave the rate unchanged or to cut further. Barring unusual circumstances, the FOMC would not consider a rate increase just after cutting its fed funds rate target.”

Poole added: “This approach to policy is appropriate when market conditions are fragile because market participants must be confident that they can take positions without the risk that the Fed might raise rates, which would reduce asset values, in the near term. Investors can then concentrate on determining the fundamental value of risky assets and can work on deals to buy such assets from holders forced to sell by their own impaired liquidity and capital positions.”

Fed Analysis: Fed Governor Poole’s specific statement that the Fed would not cut interest rates at its next meeting is highly unusual, given the Federal Reserve’s ability to influence both market and economic events via monetary policy. The Fed, usually led by the Chairman of the Federal Reserve, almost always uses opaque, highly-qualified language to both not signal its intentions and to not cause large, sudden changes in market valuations. Poole’s specific language most likely is an attempt by the Fed to reassure the markets that, barring unusual circumstances, their will not be a “start / stop monetary policy” by the Fed - - i.e. beginning an interest rate reduction policy, then reversing it - - but rather, that the Fed’s bias is toward lowering rates to promote stimulus to ensure adequate U.S. GDP growth, and counteract the negative effects of subprime mortgage and related bond defaults.

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Filed under: Washington Mutual (WM), Options

Washington Mutual (NYSE: WM), is recently down $3.71 to $20.51. WM call option volume of 48,936 contracts compares to put volume of 102,451 contracts. WM November 20 straddle is trading at $3.25. WM December option implied volatility of 87 is above its 26-week average of 37 according to Track Data, suggesting traders are purchasing puts to hedge against further downside risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Filed under: Commodities, Oil, Stocks to Buy

Crude oil’s upward arc continues. The price of natural gas, while cheaper than oil, seems to track oil’s move higher. Meanwhile, coal, while substantially cheaper as a fuel for electricity generation, still rates as a dirty fuel, despite the use of moderately-cleaner coal-fired generation technologies. And renewable energy sources, while gaining momentum, are not a present-day or near-term solution.

An option left to meet the U.S.’s growing energy needs? The above suggests that nuclear power will play a larger role, and among the nuclear plays, Entergy (NYSE: ETR) is worth a look.

Entergy is an amplified energy play, of sorts. For those seeking immediate cash, there’s Entergy’s healthy $3 annual dividend. But for those who want more than a typical utility stock, there’s the company’s present nuclear power operations, and its prospects for significantly larger nuclear power operations, moving forward. Entergy closed Tuesday down 61 cents to $123.54.

Continue reading Entergy (ETR) is a utilities play with pizzazz

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Filed under: Newspapers, News Corp’B’ (NWS), Dow Jones and Co (DJ)

Natalie Bancroft, a 27-year-old opera singer who lives in Europe and has little exposure to the worlds of journalism and commerce, is the hand-picked family representative for the Bancrofts on the board of News Corp (NYSE: NWS), according to the Wall Street Journal.

How did this happen? The family couldn’t agree on someone who would take it and be acceptable to Rupert Murdoch. They missed the deadline, and Murdoch picked someone he knew didn’t have a strong background to defend Dow Jones (NYSE: DJ)’ interest when he gobbles it up.

I thought it was a dark day when the Bancroft family decided to sell Dow Jones to Murdoch, but this makes the situation even darker. It will be sad to watch the remaking of what is one of the world’s greatest financial news empires in Murdoch’s image. Murdoch’s reputation for driving his newspapers toward yellow journalism so that he can sell more papers certainly will not be good for the solid reputation of the Wall Street Journal or any of Dow Jones’ well-respected publications.

I was hoping the family would at least have some say about the Journal’s future on the News Corp board, but this choice does not offer a strong voice for financial journalism. I still have my subscription, but I wonder how long I’ll continue that once Murdoch does his thing. Will you keep your subscription?

Lita Epstein has written more than 20 books including “Trading for Dummies” and “Reading Financial Reports for Dummies.”

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Filed under: Bad news, Management, Consumer experience, Rants and raves, Scandals, Citigroup Inc. (C), Merrill Lynch (MER), Politics, Headline news

For most of our lives bankers have been represented to us as conservative creatures, dressed in pin-stripe suits, nary to part with a dollar and certainly adverse to taking any risk. This image was cast in our movies, television, and novels. Unfortunately, with events playing out as they are today, this carefully-crafted stereotype couldn’t be further from the reality.

Mr. Drysdale, who managed Jed Clampett’s millions in the Beverly Hillbilly’s television show of the ’60s is just that — a TV character. If you look back over the last few decades it has all been a facade, and the government has participated in this fraud by loosening banking laws and allowing these institutions to wander farther and farther from rational and safe behavior in pursuit of the highest returns they could get without limit.

If you are old enough, you might remember back three decades when the banks were seeking these high returns in South America, when inflation and interest rates tempted them and they all took a big bath. Then a decade later in 1989 the commercial real estate market collapsed amid over-valuations, and many banks and thrifts collapsed along with them…right into the arms of the Federal Government, which was forced to take them over with yet another bailout. This took about five years to turn around and things were brighter by early 1995.

Continue reading Conservative bankers? Surely you jest!

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The Dow Jones Industrial Average closed down over 360 points, or 2.7%, to end at 13,298. GE (NYSE:GE) fell 2.74%. GM (NYSE:GM) was off 6.1%. Ciiigroup (NYSE:C) was down 4.8%

S&P 500 was off 44.65 points, or 2.9%, to 1,475.56. Microsoft (NASDAQ:MSFT) was down 2.4%. Oracle (NASDAQ:ORCL) was off 3.2%.

Douglas A. McIntyre is an editor at 247wallst.com.

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