Filed under: Deals, Bank of America (BAC), Countrywide Financial (CFC), Economic data, Federal Reserve

Federal Reserve Chairman Ben Bernanke today said the words the stock market longed to hear: that further interest rates “may well be necessary.” The major indexes, not surprisingly, soared following the comments which were released early after Market News International accidentally broke the embargo, an agreement to hold the remarks until the Fed officially released them.

In his first speech since the Fed’s Dec. 11 meeting, Bernanke said the fed stands “ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.” As Bloomberg News noted, Bernanke pointed out that recent data indicated that the outlook for this year has worsened.

Like Pavlov’s dogs salivating the mere thought of food, the stock market is getting pre-conditioned to expect rate cuts. How big of a rate cut depends on which pundit is speaking though expectations now seem to be for a reduction of a half a percentage point, according to Bloomberg.

The speech contained a few surprises. The Wall Street Journal noted that Bernanke argued that weak economic growth is a bigger threat than inflation while previously the Fed called the risks balanced or refused to say what was the bigger problem.

Looming over the speech was news that Bank of America Corporation (NYSE: BAC) was in advanced talks to buy floundering mortgage lender Countrywide Financial Corporation (NYSE: CFC) according to the Journal. Shares of the Countrywide skyrocketed 60%. Let’s hope this means good news for more than just Countrywide CEO Angelo Mozilo.

Read | Permalink | Email this | Comments

Share This

Filed under: Stocks to Buy

The banking and financial sectors have certainly taken their lumps amid the housing sector’s correction, but that doesn’t mean there aren’t bank stock opportunities out there, and one bank worth a review is Hudson City Bancorp.

Hudson City Bancorp (Nasdaq: HCBK) is a community bank with about 110 branches in the Metropolitan New York area.

Analysts like HCBK’s loan growth, ramping fee income, and strong cost control history. Best of all, analysts say Hudson should not be adversely affected by the secondary mortgage market and its incorrect pricing of loans because Hudson holds most of the loans it originates.

Further, margin spreads should increase in 2008, and charge-offs should be minimal. The Reuters FY 2007/FY 2008 EPS consensus estimates for HCBK are $0.59 to $0.82.

The risks? An inversion of the yield curve would hurt HCBK’s results; competition is modest.

The First Call mean rating for HCBK is: Buy [13 firms]. Mean 2008 target: $15.50 [high: $18, low: $12].

Stock Analysis: Hudson City Bancorp is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from HCBK’s shares. Sell/Stop Loss if you were to purchase shares in this company: $8.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Permalink | Email this | Comments

Share This

Filed under: Deals, Rumors, India, Bank of America (BAC), Countrywide Financial (CFC), TD AmeriTrade Holding (AMTD), Washington Mutual (WM)

With today’s rumors of Bank of America Corporation (NYSE: BAC) in talks to buy Countrywide Financial Corporation (NYSE: CFC), here are two more stocks that have gotten crushed, which may be targeted as M&A candidates. Here are 2 financial stocks that I think have a fairly good chance of getting taken over by the end of ‘08.

E Trade Financial Corporation (NASDAQ: ETFC), the online brokerage, has lost investors tons of money. The company is shedding non-core divisions and getting back to basics. Etrade usually is involved in rumors of either joining or buying TD Ameritrade Holding Corporation Corp. (NASDAQ: AMTD), and I think that we are going to see some movement in terms of selling the online brokerage firm. At just around $4/share, these stocks are beginning to look interesting again.

Washington Mutual, Inc. (NYSE: WM) has seen its stock drop by some 75% over the last year. The stock is trading with a PE of a bit more the 4, and has a dividend yield over 17%. Now I would guess that most analysts believe the dividend is going to be cut. I wouldn’t be at all surprised to see a foreign bank that wants to get a big foothold in the US to make a play for the bank.

With stocks so low, look for cash rich companies to be on the prowl for interesting financial companies.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer’s fund has a position and owns stock in ETFC and is long the stock. He has no positions in any other stock mentioned as of 1/10/08.

Read | Permalink | Email this | Comments

Share This

Filed under: Bad news, Consumer experience, Southwest Airlines (LUV), Contl Airlines’B’ (CAL), UAL Corp (UAUA), Oil, Delta Air Lines (DAL)

There has been plenty of buzz lately about merger activity among the major airlines. The latest thought is that Delta Airlines, Inc. (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) will join forces in a battle against record-high fuel and other challenges to the industry. But despite the positive effect some feel consolidation may have on the airline sector, passengers are still facing stressful travel.

Crowded gates and cramped airplane seats. Delayed flights. The struggle to reduce one’s toiletry kit to a series of 3-ounce portions. And it is only getting worse. A report in today’s New York Times reported that big airlines are cutting down on domestic capacity in 2008 and raising ticket prices while they are at it. For every $10 increase in a barrel of oil, airlines are forced to lift round-trip fares by an average of $18 (and who can blame them?). Black gold is currently hovering close to the $100 level; about a year ago, it was close to $50. In sum, air travel will be more expensive, and just as crowded (if not more so). In 2007, jets were already more crowded than they’d ever been… and posted the highest-ever percentage of late arrivals.

Continue reading Industry mergers may not help a bad year for air travelers

Read | Permalink | Email this | Comments

Share This

Filed under: Forecasts, Politics, Federal Reserve

U.S. Federal Reserve Chairman Ben Bernanke’s signal, in a speech Thursday, that more interest rate cuts are on the way, should not cause Congressional officials to be less lax regarding fiscal policy stimulus, economists and analysts told BloggingStocks Thursday.

“In light of recent changes in the outlook for and the risks to growth, additional policy easing may be necessary,” Bernanke said in a speech before a business group in Washington. Bernanke added that, “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.”

Continue reading Economists make case for fiscal stimulus, even with Fed rate cuts

Permalink | Email this | Comments

Share This

Filed under: Products and services, Adobe Systems (ADBE), Bargain stocks, Chasing Value, Stocks to Buy, Technology, Best Stocks for 2008, Loews Corporation (LTR)

Some companies seem to always be just outside my grasp. They sit on my watch-list for long periods and often never present an opportunity to acquire the stock. Adobe Systems (NASDAQ: ADBE), which closed at $42.93 on December 28, 2007, fits the bill. I almost included it in my Chasing Value: Final list — 8 stocks for 2008, but alas, I decided I felt more confident in stocks like Loews Corp. (NYSE: LTR), which was the last stock added.

I asked one of the advertising company officers in town how important Adobe software was to their business and he replied, “They could not function without it, they would be out of business.” I’m sure he was exaggerating, but only a little.

Adobe is not a monopoly because you can work around it with less robust programs, but no company offers the integrated suite of graphics products that Adobe does, including Photoshop, InDesign, Illustrator, Acrobat and if you’re online much, you must receive multiple PDF files per day.

Continue reading Chasing Value: Adobe (ADBE) — picture this

Permalink | Email this | Comments

Share This

Filed under: Deals, Management, JPMorgan Chase (JPM), Politics

Cheerio! What to do if you’re a 54-year-old former world leader, in good health, with Western sympathies? Days of leading a major country are behind you, but you’re not ready to pack it in anytime soon. Link up with a major American corporation, of course! Tony Blair, who served as Great Britain’s prime minister from 1997 through June of last year, has agreed to join with JPMorgan Chase (NYSE: JPM) in the role of part-time adviser.

The financial terms of the arrangement weren’t disclosed, but one Manhattan recruitment consultant estimated in The Financial Times that Blair’s fee would likely be more than $1 million a year (though that sum doesn’t go quite as far in pounds these days).

Continue reading JPMorgan Chase taps Tony Blair for advice

Read | Permalink | Email this | Comments

Share This

Filed under: Microsoft (MSFT), Oracle Corp (ORCL), EMC Corp (EMC), Technology

The enterprise storage market has been fairly hot lately. After all, corporate America is drowning in data.

In fact, we’ve seen a variety of storage-company IPOs, such as Data Domain (NASDAQ: DDUP), Compellent Technologies (NYSE: CML) and 3PAR (NYSE: PAR).

But the incumbents are not sitting around. Take EMC (NYSE: EMC). This week, the company launched a new offering, called CLARiiON AX4. It scales to 60 terabytes and works with two key standards (iSCSI or Fibre Channel SAN). Of course, there is integration with Microsoft (NASDAQ: MSFT), Oracle (NASDAQ: ORCL), and SAP (NYSE: SAP) product lines.

EMC is also targeting the small- and medium-sized business market segment, which certainly needs stronger solutions.

But there’s something else that’s important; CLARiiON AX4 is seamless with VMware (NYSE: VMW). “Just as VMware is consolidating data centers, we are also seeing consolidation of storage,” said Barry Ader, who is the senior director of Storage Product Marketing at EMC. “We are also seeing lots of growth with VMware with the SMB market.”

And with EMC owning about 86% of VMware - which has a market cap of $30.7 billion - there should be a nice boost for the storage business. And, more importantly, a way to deal with the fierce competition in the space.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Permalink | Email this | Comments

Share This

Filed under: Law, Scandals

Just in case you thought our public officials were doing a decent job, here’s some more evidence that they’re not: a Justice Department audit released today found that FBI wiretaps set up to eavesdrop on suspected criminals are sometimes cut off by the phone companies because the agency doesn’t pay its phone bills on time.

This is our Federal Bureau of Investigation — I can’t even imagine what kind of gaffes happen at other agencies. According to the Associated Press: “In at least one case, a wiretap used in a Foreign Intelligence Surveillance Act investigation ‘was halted due to untimely payment,’ the audit found. FISA wiretaps are used in the government’s most sensitive and secretive criminal investigations, and allow eavesdropping on suspected terrorists or spies.”

Great — the agency’s failure to pay bills results in lost evidence, and sometimes prohibits us from learning about terrorist activities. There was even one FBI employee who stole money that was supposed to be used to pay for wiretaps.

This is indicative of some internal controls problems in Washington, and as politicians talk tough about keeping tabs on terrorist activities, remember — it’s all just talk if they don’t pay the phone bills.

Read | Permalink | Email this | Comments

Share This

Filed under: Deals, AT and T (T), Sprint Nextel Corp (S), Personal finance, Technology, Israel

I had no idea when I posted yesterday about two Israeli stocks to buy for a market bounce that one of the stocks I mentioned would spike more than 10%. Amdocs Limited (NYSE: DOX) is the market leader in customer experience systems innovation, enabling world-leading service providers to deliver an integrated, innovative and intentional customer experience at every point of service.

The company has experienced one heck of a 48 hours. On Tuesday there was the news that Sprint/Nextel Corporation (NYSE: S) is soft-launching a WiMAX network, and picked communications software company Amdocs to build and maintain the Xohm web portal and manage its customer service, billing, and other operations.

Even bigger is the news today that Amdocs signed a deal to provide support services to AT&T (NYSE: T), which one analyst estimated is worth more than $100 million a year. Wedbush Morgan analyst Scott P. Sutherland reiterated a “Strong Buy” rating on Amdocs, and estimated that the deal “is initially worth well over $100 million annually and has the potential to be even more.”

Continue reading A great 48 hours for Amdocs (DOX)

Read | Read | Permalink | Email this | Comments

Share This