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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • The P in PIIGS Saves the Day By: Charles Payne 0 comments
    Sep 8, 2010 3:16 PM
    The market has been higher most of the session, helped in part by a successful auction of Portuguese debt. This short week has seen those so-called PIIGS nations back in the news for all of the wrong reasons. I'm curious as to why news about the splitting of Allied Irish Bank hasn't had a negative impact on the market, yet. We are doing more digging. In the meantime, takeover fever has stocks giddy, especially in the mining and metals sectors. I love the action, and hope a couple of deals could spur deals across additional sectors based on valuation and global demand. Domestically the biggest point gainer, Phillips-Van Heusen (NYSE:PVH), posted earnings results after the bell last night that came in 20% above management's guidance. A retailer leading the way is a great sign, although I had no idea people were still buying Tommy Hilfiger...go figure.

    Spotlight: Retailers
    By: Brian Sozzi, Equity Research Analyst

    Retail stocks are catching some interest today following an upgrade on Costco (NASDAQ:COST) from Goldman and a strong earnings report from Phillips-Van Heusen after the close yesterday. I don't believe the quarter from PVH is indicative of trends throughout the retail sector as its purchase of Tommy Hilfiger greatly influenced results. The apparel retailer beat on earnings by $0.18 per share, though did fall short of a few of the higher end estimates from the analyst community. I encourage subscribers to check out my article on the sentiment that may be developing on the retail sector at www.wstreet.com. The sector has been beaten down like a dog that just wet the rug, and justifiably so as souring economic data question the state of the U.S. consumer. Now, major names in the sector are trading at very attractive valuations relative to historical benchmarks and other sectors in the market. Considering these companies are mostly cash rich and are operating lean, a case could certainly be constructed for investment.
    JOLTS Data
    By: David Silver, Research Analyst

    The total number of job openings in the U.S. increased slightly in July, and the hiring rate remained flat. Total job openings rose 2.3% to a seasonally adjusted 3.04 million in July, according to the Labor Department's Job Openings and Labor Turnover Survey (JOLTS). About 4.2 million workers were added to payrolls in July, but that is below the five million mark seen at the onset of the recession in December 2007. Job openings appear to be on the verge of continuing an upward trend. However, for all those that are disheartened about there being no jobs out there, apparently there are more than 3 million jobs that are available. So for the more than 14.8 million people that are unemployed, that means there is almost five unemployed persons for every position. (I guess I need to work on my motivational speaking abilities)
    Mortgage Color
    By: David Urani, Research Analyst

    Mortgage purchase applications inched up again last week for the third week in a row. Purchase apps are now approximately 10% off the July low, although still 38% below April levels. Home sales appear to have finally hit a floor in terms of demand, although the market looks to be quite slow picking itself up from that level. Refinance applications also remain at very high levels as mortgage rates hold at about 4.5%.
    Chinese Finger Trap
    By: Conley Turner, Research Analyst

    China was granted Most Favored Nation (MFN) status with the U.S. on a permanent basis in 2000. This came after decades of that country having to endure a cumbersome annual review process by the sitting president with the promise of ongoing mutual benefit. Fast forward to present day and things have not worked out exactly as imagined. China is now the beneficiary of an immense trade imbalance with the U.S. and thus far, all efforts have proved ineffective in resolving the situation.

    The MFN designation essentially assures normalized trading relations between partners. With the U.S. and China, the latter had that status restored (after having been suspended in 1951) in 1980. However, it was subject to an annual review because China did not allow the freedom of emigration as mandated by the 1974 Jackson-Vanik Amendment. The country received permanent status in 2000 under the promise of jobs creation for American workers, more free trade, and an overall decline in the then significant trade imbalance.

    In 2000, that trade deficit with China stood at approximately $84 billion. However by 2009, that figure had ballooned to $227 billion, and continues to climb in 2010. With manufacturing now accounting for as much as 23% of China's total GDP, that country's government is clearly unwilling to relinquish that advantage. The imbalance in trade is now at critical mass, and is prompting a growing number of lawmakers in the U.S. to call for stricter measures to resolve the situation. This does not exclude the actual revocation of China's MFN status. By and large, it appears that both countries are headed for some kind of trade related showdown.

    Disclosure: none
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