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Market Folly submits:Market strategist Jeff Saut is out with his latest investment commentary entitled, "Don't bet the farm." In it, he lays out some basic risk management principles. The first of which, obviously, is to not bet the proverbial farm on any one scenario, no matter how good it looks. Managing downside risk is the key to success in markets. Louis Bacon, famed hedge fund manager at Moore Capital, will be the first to tell you that. Saut also believes that portfolio rebalancing is one of the tenets of successful investing. This whole conversation is an extension of his commentary last week where proclaimed risk adjusted stock selection is a key to portfolio success. You can read his entire investment strategy for the rest of his thoughts on risk management but we wanted to touch on his latest market thoughts as well. Saut highlights an excerpt from Lowry's Selling Pressure Index, who writes,Complete Story »

Frederic Ruffy submits: SentimentStocks are broadly higher on hopes for the euro-zone and following a round of mixed economic data Tuesday. The table was set for early gains on Wall Street after European equity markets edged higher and the euro moved beyond 1.23 against the buck. The strength across the Atlantic followed a successful auction of European debt. Meanwhile, in the US, the news was mixed. Data released before the opening bell showed prices of imports falling .6 percent in May, which follows a 1.1 percent increase the month before. Economists were looking for a larger 1.2 percent decline. A separate report showed the NY Empire State Index at 19.57 in June, up from 19.11 the month before and not far from economist estimates of 20.0. The latest HMI housing index was less bullish, it showed a 5-point drop to only 17 for June. However, investors seemed to shrug off the poor housing number (even as Housing Starts data looms Wednesday) and the Dow Jones Industrial Average is up 170 points in the final hour. The CBOE Volatility Index (VIX) fell 2.63 to 25.95. Options trading is running a bit slower than normal, about 6 million calls and 5.2 million puts traded so far.Bullish Order FlowMoody’s (MCO) is up 42 cents to $20.33 and 4,378 Jun 21 calls traded. 67 pecent traded at the ask and existing open interest is 986 contracts. Looks like some investors paying 28 cents to open positions. ISEE data, at 80 percent or 1210 calls on the ISE, is also consistent with opening customer buyers. Implied volatility in the credit rating agency is down 5.5 percent to 49 ahead of a presentation at a Williams Blair conference at 12:30 eastern time. Complete Story »

Market Folly submits:(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)Next up is Chris Shumway's hedge fund Shumway Capital Partners. Prior to founding his firm, Shumway was previously one of Julian Robertson's right-hand men at legendary hedge fund Tiger Management. As such, he joins the other successful Tiger Cubs and is included in the Tiger Cub portfolio created with Alphaclone for hedge fund replication. Shumway Capital Partners focuses on intensive fundamental research to drive their long/short equity strategy. Back in 2009, Shumway was listed in Barron's top 100 hedge funds for 2009 with a rolling 3-year annualized return of 28%. However, 2010 has proven difficult for the firm as its Sakkonet Fund was down 10% in May after it had gained 4.3% through April. Shumway received his MBA from Harvard Business School and his undergraduate degree from the University of Virginia.Complete Story »

Andrew Wilkinson submits: Cemex SAB de CV (CX) – Shares of the world’s third-largest cement maker are trading 1.15% higher during the current session to stand at $10.64, but wary options investors are beefing up on near-term put options on the stock ahead of Cemex’s first-quarter earnings report slated for release after the closing bell on April 26, 2010. Bearish options traders scooped up more than 30,000 put contracts at the May $10 strike for an average premium of $0.27 each. Put-buyers make money if shares of the underlying stock decline 8.5% from the current price to breach the average breakeven point on the puts at $9.73 by expiration day next month. Xerox Corp. (XRX) – Short straddle-strategists flooded the options field on Xerox Corp. today with shares of the printing and imaging solutions company trading 0.10% lower to $10.70 as of 12:40 pm (ET). The biggest straddle play employed on XRX thus far today appears to be the work of an investor who is expecting Xerox’s shares to rally up to $11.00 in the next several months. The trader sold 18,650 puts at the October $11 strike for a premium of $1.12 each, and sold 18,650 calls at the same strike for $0.76 apiece. Gross premium enjoyed on the transaction amounts to $1.88 per contract. The investor keeps the full amount of premium received if shares of the underlying stock settle at $11.00 at expiration. Parameters of the transaction suggest the trader expects, at the very least, to see XRX shares trade within a narrow range through expiration day. However, the investor is exposed to potentially devastating losses should Xerox shares rally above the upper breakeven price of $12.88, or should shares slip beneath the lower breakeven point at $9.12, ahead of October expiration. Complete Story »

Hickey and Walters (Bespoke) submit:
Last week we highlighted our new Daily Dividend Report availabe to Bespoke Premium subscribers that provides a list of all common stocks, ETFs, REITs, and closed-end funds going ex-dividend over the next week. The report comes in both PDF and Excel format. On the first page of the report, we highlight just the S&P 500 companies going ex-dividend over the next week (as shown below). Some key names going ex this week include Altria Group (MO), Merck (MRK), and Coca-Cola (KO). Remember, to capture the dividend, you have to own the shares at the close on the last trading day prior to the ex-dividend date. click to enlargeComplete Story »

• Fed's exit strategy. Heavy snowfall prompted the cancellation of a congressional hearing yesterday, but Bernanke released the testimony he'd prepared on how the Federal Reserve plans to tighten credit once the economy has sufficiently recovered. Bernanke said the interest rate on excess reserves might replace the federal-funds rate as the main policy tool for a time, and suggested the Fed might begin raising its discount rate soon. However, Bernanke stressed that changes in the discount rate should not be taken as a sign of an imminent rate hike.
• Fed looks to money market funds. Sources say the Federal Reserve is in talks with money-market mutual funds to help drain up to $1T from the financial system as officials prepare for the first interest-rate hike since June 2006. The Fed is also said to be considering reverse repurchase agreements with Fannie Mae (FNM) and Freddie Mac (FRE).
• Air Products launches hostile bid. Air Products and Chemicals (APD) launched a hostile tender offer for Airgas (ARG) after its bid was rejected earlier this week. The offer is for all outstanding common shares for $60/share in cash. Separately, the SEC is reportedly investigating unusual activity in Airgas call options that occurred before Air Products and Chemicals announced a $5.1B bid for the company. Air Products made its unsolicited bid on Feb. 5, causing Airgas shares to jump as much as 44%. A burst of activity in select Airgas call options before the bid was announced has regulators concerned that the takeover news was leaked early and used to profit on the Airgas stock spike.
• EU discusses Greek aid. European Union leaders meet today and may create a framework for a Greek rescue package. One possibility is to provide Greece with loan guarantees as long as Prime Minister George Papandreou quiets street protests and further cuts the country's budget deficit. A Spanish official said countries were being spurred to action because "it's about the credibility of the euro," but German citizens, with a longstanding commitment to fiscal responsibility, are loathe to see their country involved in a bailout and "will wish they had their Deutsche Mark back" if a rescue goes through.
• AIG: Mind your grades, get a bonus. AIG (AIG) is rolling out a new compensation system that will rate employees relative to their peers on a scale of 1 to 4, and will dole out bonuses according to employees' rankings. The approach, called a "forced distribution" system, has been used by large companies such as GE (GE) to help reward top employees and weed out underperforming ones over time. Only 10% of employees will get the top "1" ranking, 20% will be ranked as "2," 50% will be ranked as "3," and the remaining 20% will be ranked as "4."
• CME to buy Dow Jones stake. CME Group (CME) reached a deal to take a 90% stake in Dow Jones Indexes (NWS). CME will pay Dow Jones $607.5M for the stake, and Dow Jones will retain a management role in the Dow Jones Industrial Average.
• TARP losses, gains. The Treasury officially recognized the loss of its $2.3B investment in CIT Group (CIT) yesterday. Despite the loss, the Treasury expects the cost of TARP to continue to fall and expects to turn a profit on aid provided directly to the banking sector. To that end, PNC (PNC) announced yesterday that it had completed its TARP payment by redeeming $7.6B of preferred government shares, and Fifth Third Bancorp (FITB) will "most likely" repay its $3.4B of TARP funds in the second half of the year.
• Treasury considers partial Citi sale. The Treasury is said to be considering the sale of a $2.2B investment in Citigroup's (C) junior debt in order to lock in a profit from the firm's bailout. Officials are debating whether it's best to sell the securities, known as trust preferreds, before or after the government sells its 27% equity stake.
• Small banks struggle with soured loans. Soured commercial real-estate loans are still tripping up the economy, according to a report by the Congressional Oversight Panel. Specifically, there are nearly 3,000 small banks that may have to dramatically cut their lending as losses on those loans may reach as high as $200B-300B. Concern about banks' exposure to commercial real estate has been building for months, and Elizabeth Warren, head of the oversight panel, warns that those banks "are about to get hit by a tidal wave of commercial-loan failures."
• Google goes optic for zippy internet. Google (GOOG) says it will start offering ultrafast internet service to a select number of consumers, building its own fiber-optic networks with the aim of serving 50,000 to 500,000 people. For Google, it's a major step into supplying internet connections rather than the services that run on them, though Google says developing the former will help grow the latter. However, the move is risky and doesn't have the necessary scale to compete with industry giants, leading some to say it's as much about politics as it is about technology.
• New antitrust hurdle for Live Nation Entertainment. Live Nation Entertainment (LYV) will be subject to a second antitrust review in the U.K. after a court ruling said regulators had failed to fully consider the input of a competitor in the market for ticket sales. If antitrust officials reverse their earlier approval of the $889M merger, Live Nation Entertainment may be required to make changes to its U.K. operations.
• U.K.'s Brown sees progress on global bank tax. U.K. Prime Minister Gordon Brown said the world's leading economies are close to agreeing on a global bank tax, noting that public opinion has shifted in favor of the tax since Obama's decision last month to raise $90B from a U.S. bank fee. The U.K. hopes to lock in global agreement on the bank tax at the G-20 summit in June.
• Rio employees face Chinese trial. After being detained for seven months, four Rio Tinto (RTP) employees will now stand trial in China on accusations of stealing commercial secrets and taking bribes. Nearly all criminal cases that go to trial in China end in conviction. Australia urged the Chinese to deal with the trials quickly and transparently, but a lawyer involved in the cases said the proceedings won't be made public because they involve commercial secrets.
• Lending, property prices surge in China. China's lending jumped to 1.4T yuan ($203B) in January, more than in the three previous months combined, as banks extended more credit ahead of an expected tightening in monetary policy. Property prices climbed the most in 21 months, rising 9.5% from the year before.
• Motorola may roll out new plan for units. Motorola (MOT) is said to be reconsidering its strategy of selling off its largest unit, which makes set-top boxes and wireless-networking gear. Instead, the company may try to separate out the various businesses, by auctioning the network unit and spinning off the set-top box business with its handset business into a new public company. That would leave Motorola at one-third of its current size.
• Travelport IPO isn't going anywhere. U.S. travel group Travelport delayed its planned £1.2B IPO in London, blaming market volatility for its difficulties in winning investor support. The decision is a blow to majority-owner Blackstone (BX) and its plans to list several other companies this year. It also bodes poorly for the IPO market generally, since news of Travelport's flotation was taken as a sign of a possible IPO revival.
• MySpace CEO steps down. After less than a year at the helm, News Corp. (NWS) announced that Owen Van Natta is stepping down as CEO of MySpace. The social networking site has struggled to keep up with rival Facebook.
• Trade balance. December's trade balance was -$40.2B vs. -$36.8B expected and -$36.4B prior. Exports rose 3.3% to $142.7B. Imports rose 4.8% to $182.9B.

Earnings: Thursday Before Open

• EnCana (ECA): Q4 EPS of $0.50 beats by $0.08. Revenue of $2.7B (-44.2%) vs. $3B. (PR)
• Macerich (MAC): Q4 EPS of $0.90 misses by $0.01. Revenue of $201M (-17.2%) vs. $200M. (PR)
• Marriott International (MAR): Q4 EPS of $0.32 beats by $0.06. Revenue of $3.3B (-12.1%) vs. $3.2B. (PR)
• Teradata (TDC): Q4 EPS of $0.45 beats by $0.08. Revenue of $496M (+0.6%) vs. $478M. (PR)

Earnings: Wednesday After Close

• Activision (ATVI): Q4 EPS of $0.49 beats by $0.05. Revenue of $2.5B vs. $2.2B. Sees Q1 EPS of $0.02 vs. $0.08, on sales of $525M vs. $741M (Company plans one release in last week of March). Sees 2010 EPS of $0.70 vs. $0.73, on sales of $4.4B vs. $4.8B. Shares +3.3% AH. (PR, earnings call transcript)
• Allstate (ALL): Q4 EPS of $1.09 beats by $0.08. Revenue of $8.1B (+23%) in-line. “We successfully executed our first priority of keeping Allstate financially strong by achieving excellent underwriting margins and improving our capital position." Shares +0.2% AH. (PR)
• Amkor Technology (AMKR)Q4 EPS of $0.21 beats by $0.12. Revenue of $668M (+21.7%) vs. $549M. Shares -3.7% AH. (PR, earnings call transcript)
• Arris Group (ARRS)Q4 EPS of $0.32 beats by $0.05. Revenue of $300M (+2.6%) vs. $276M. (PR, earnings call transcript)
• Biomed Realty Trust (BMR): Q4 FFO of $0.31 in-line. Revenue of $88M (+6%) vs. $89M. (PR)
• Boston Scientific (BSX)Q4 EPS of $0.13, in-line. Revenue of $2.08B (+3.8%) vs. $2.07B. Guidance for Q1 and FY10 revenues in-line. Shares -3.1% AH. (PR)
• DENTSPLY International (XRAY): Q4 EPS of $0.48 misses by $0.01. Revenue of $569M (+12%) vs. $556M. (PR)
• Highwoods Properties (HIW): Q4 FFO of $0.60 beats by $0.01. Revenue of $114M (-1%) in-line. (PR)
• Masco (MAS)Q4 EPS of $0.02 beats by $0.05. Revenue of $1.9B (-3.0%) vs. $1.96B. Shares -0.6% AH. (PR)
• Prudential Financial (PRU): Q4 EPS of $1.07 misses by $0.04. Revenue of $6.8B (+16%) vs. $6.86B. Sale of Wachovia Securities JV brought $4.5B in cash vs. initial 2003 book value of $1B. Shares -2.6% AH. (PR)
• Realty Income (O): Q4 FFO of $0.47 beats by $0.01. Revenue of $82M (-1%) in-line. (PR)

Today's Markets

• In Asia, Nikkei +0.3% to 9964. Hang Seng +1.9% to 20291. Shanghai +0.1% to 2986. BSE +1.4% to 16153.
• In Europe at midday, London +0.8% to 5175. Paris +0.4% to 3650. Frankfurt +0.1% to 5542.
• Futures: Dow +0.44% to 10029. S&P +0.52% to 1069. Nasdaq +0.44%.

Thursday's Economic Calendar

• 8:30 Initial Jobless Claims 10:00 Business Inventories 10:30 EIA Natural Gas Inventory 1:00 PM 30-Yr Note Auction 4:30 PM Money Supply 4:30 PM Fed Balance Sheet
• Notable earnings before Thursday's open: ALU, AN, BWA, ECA, ECL, EXPE, FLIR, LH, MAC, MAR, NRG, OHI, PEP, PGN, PLD, PM, PTEN, TDC, VIA.B
• Notable earnings after Thursday's close: ACL, BGC, CAKE, CEPH, DCT, MFE, RSG

Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.Complete Story »

Frederic Ruffy submits: SentimentStocks opened higher following a round of better-than-expected economic data, and have since slipped into a post-holiday lull midday. Data released before the opening bell on Wall Street showed personal incomes and spending increasing by .2 percent and spending by .7 percent, respectively, in October, which was better than the .1 percent and .5 percent economists had expected. Separate data showed weekly jobless claims falling by 34,000 to 466,000 in the period ended November 21. Economists were looking for a smaller 1,000 decline.The latest durable goods report was a bit of a downer, however. It showed an unexpected drop in October. Total orders fell .6 percent and, excluding transports, fell 1.3 percent. Economists were looking for a modest increase.Complete Story »

Brooks McFeely submits:4:10 PM, Sep 11, 2009 --

• NYSE down 6.98 (0.1%) to 6,843.83.
• DJIA down 22 (0.23%) to 9,605.
• S&P 500 down 1.41 (0.14%) to 1,043.
• Nasdaq down 3.12 (0.2%) to 2,081.

GLOBAL SENTIMENT Complete Story »