David White

Equities Update: Earnings Power

Great article. Art Cashin says this market reminds him of the dot.com bubble.

Also some banks are making very questionable upgrades of troubled companies. An example would be the Barclay Capital upgrade of AMR. AMR has a debt to capital ratio of 1.42%. It's underwater! It is estimated to lose -$4.57 in 2009. It's average analyst rating was 1.9 on Yahoo Finance. In contrast, LUV has a debt to capital ratio of 40%. It is estimated to be barely profitable for the rest of 2009. Yet its average analyst rating is 2.8. Go figure! Are the banks protecting the loans they are most worried about? Surely this dichotomy is not justified on a fundamental basis.

Cramer's Mad Money: Four Signs of an Upcoming Rally (1/23/09)

Every time analysts, probably Cramer included, try to push you in one definite direction, you need to think seriously about possibly doing the opposite. There are several things that are now arguing against a sustained rally. First the job losses have been incredibly bad this year so far. This has been especially true in the last few days with 70,000 jobs lost on Monday alone. This means the unemployment rate is worsening. This means all of the credit holders of mortgages, credit card debt, etc. have even more to worry about this year.

Second there more credit defaults than expected. The earnings results for the S&P500 have been generally worse than expected. Without the stimulus package money, there is no hope of stopping the downward exonomic spiral. We keep hearing about Republican opposition, which is a definite negative to the markets.

Finally oil was down substantially today. It reports reserves tomorrow. Oil Stocks have been growing every week lately. With oil up the last few days, some of those storage tankers sitting in the Gulf likely delivered this week. Oil stocks are likely up again. This should push the oil prices further down. The oil prices decreases will likely take other commodities and the equities markets with them.