Over 30 retailers reported monthly sales results for August over the past two days. While many areas of the economy have been showing relative improvement over the past few months, there have been few bright spots in retail. However, August results provide some hope that things are finally starting to turn around.

Overall sales at the 33 retailers we track decreased 0.4% to $30.054 Billion in August, while same-store sales declined 2.5%. Retailers have now seen same-store sales declines for 12 consecutive months. However, this was the least negative comp sales decline since April.

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our ETF Trends Report to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

As expected, July didn’t provide much of a boost to retailers, as the majority of companies reporting monthly results missed consensus analyst estimates. A combination of unseasonably cool weather, a later Labor Day this year causing tax holidays and promotions to be shifted into August, and consumers continuing to be cautious with their spending resulted in the 11th consecutive month of same-store sales declines.

Overall net sales for July were $27.976 Billion, a 2.7% decline from July 2008. On a comparable same-store basis, sales were down 4.6% from the prior period vs. a gain of 1.7% last July. Retailers continue to be up against tough comparisons from last year when shoppers had stimulus checks to spend. There was decidedly little gains in July from back-to-school spending. Almost every retailer mentioned the effect of Labor day falling a week later than last year – most didn’t start back-to-school promotions until late July or early August, and it seems most consumers are willing to wait for deals to begin the seasonal shopping.

June was another disappointing month for most retailers, as unseasonably cold and wet weather dampened prospects, in addition to the fact that stores were up against comps from last year when consumer had stimulus checks in their pockets. The best performers continue to be teen retailers Aeropostale (ARO) and The Buckle (BKE), as well as off-price retailers TJX and Ross Stores (ROST).

For the 33 retailers we track that report monthly sales data, overall net sales for June were $34.144 Billion, a 2.6% decline from June 2008. On a comparable same-store basis, sales were down 4.7% from the prior period vs. a gain of 2.1% last June. The optimism we saw back in April when things seemed to be improving for the most part has disappeared, as just about every retailer mentioned how tough the retail environment is, and how the frugal consumer has really changed the landscape. Things aren’t expected to pick up through the summer, but the hope is that an early back-to-school season will bring at least marginal improvement starting in September.

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas over the upcoming trading weeks. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.

Numerous sources say that low quality stocks have led the recent US stock market rally. While that may be true in terms of percent change in price, looking at the question from the perspective of the slope of the primary trend, we draw a somewhat different conclusion about what’s doing well.

Review Method:

• U.S. mulls financial watchdog. In an effort to address what's currently a blind-spot in regulation, Obama officials are considering creating a new agency to police mortgages, insurance and other consumer-geared financial products. A plan could be unveiled in the coming weeks.
• SEC stripdown? Officials may suggest stripping the SEC of some of its powers, including giving the Federal Reserve control over too-big-to-fail financial firms, sources say. Other SEC functions on the table include oversight of mutual funds, and its roll in consumer-finance products (see above). Sources say SEC chief Mary Schapiro feels largely left out of recent talks on a planned regulatory overhaul, and has pledged to fight any attempt to shrink the SEC's oversight.
• Credit card regulation passes Senate. The Senate passed (90-5) sweeping new restrictions on credit-card companies, including banning sudden surges in interest rates and extra fees for telephone payments, and forcing issuers to apply payments above the minimum due to balances carrying the highest rate. Other measures focus on bringing consumers clarity, such as telling them how long it will take to be debt-free if they pay only the minimum balance. Senator Chris Dodd called the measures "a victory for every American consumer who has ever suffered at the hands of a credit card company." The overhaul should pass the House in coming days, and be signed into law by the president next week.
• Share sale nets BofA $13.5B. Bank of America (BAC) said Tuesday it raised $13.5B in less than two weeks by selling 1.25B shares at an average price of $10.77. Recently-released stress-test results found BofA needed an additional $33.9B. Last week, it sold a stake in China Construction Bank for $7.3B, which means it's now more than half way.
• H-P issues sober outlook. Tech giant Hewlett-Packard (HPQ) posted FQ2 earnings in-line with analyst expectations, but threw cold water on suggestions industry sales were stabilizing after it announced another 6,400 layoffs. During its earnings call (full transcript) with analysts, CEO Mark Hurd gave a tepid forecast for sales through year-end, with revenue seen down 4-5% versus a previous 2-5%. "CEOs have been giving marching orders to be very particular about new projects," he said.
• Microsoft readies revamped search engine. Sources say Microsoft (MSFT) will unveil a new version of its search engine next week at WSJ's D: All Things Digital conference in a renewed effort to compete with Google (GOOG). Key improvements include better-organized results to help reduce not-useful clicks. On Tuesday Yahoo described plans to beef up its search by answering queries with real-world information rather than links.
• Intel's darkhorse OS. Intel (INTC) unveiled a new version of its Linux-varient OS, Moblin, which has emerged as an improbable competitor for Windows (MSFT) in the fast-growing netbook market. Moblin's "M-zone" interface is designed to make it easier for users play digital media, surf the internet, and social network. Designed to run on mobile devices, Moblin could be distruptive not only to Windows, but to Google's (GOOG) Android, and could emerge as an option in iPhone (AAPL) competitors.
• Novartis buys generic cancer unit for $1.2B. Novartis (NVS) will pay €925M to buy the injectable generic cancer drugs business of Austria's EBEWE Pharma, and says it may pursue other similar deals in its planned diversification away from brand-name treatments. Shares +0.7% in Zurich.
• Japan GDP shrinks at record clip. Japan's economy contracted by 4% in Q1, or 15.2% annualized, its fastest decline on record. Exports plunged by 26%, also a record, amid a stronger yen and a weak global economy. Some analysts think the worst is probably over, citing reduced inventories and the government's aggressive stimulus, but BoJ governor Masaaki Shirakawa said any rebound would be no more than restocking, and that he expects global consumption to remain weak.
• Morgage applications rose 2.3% last week after falling 8.6% a week earlier, while 30-year fixed rates declined 7 bps to 4.69%, just one point short of the record. Applications for refinance mortgages rose to 73.6% of all applications vs. 71.9% last week.
• Housing starts drop to record low. New home construction fell to its lowest pace on record in April, disappointing economists who had hoped for a modest increase. Housing starts fell 12.8% to an annual pace of 458,000, indicating the market remains oversupplied despite a recent upturn in homebuilder confidence. Single-family homes, the one bright spot, were up 2.8%, but apartments and multi-family units plunged 42.2%. (see Census Department's report)
• Chain store sales fell 0.2% in the first two weeks of May from the same period last month, according to Redbook. Analysts were expecting a 0.1% drop. Weekly sales were down 1.2% vs. last week, ICSC said separately, noting both traffic and sales "slowed dramatically." Retail HOLDRS ETF (RTH) was down 0.4% Tuesday.

Earnings: Before Open

• AnnTaylor (ANN): Q1 EPS of -$0.04 beats by $0.09. Revenue of $427M (-27.9%) vs. $455M. Comps fell 30.7%. Sees only modest improvement in Q2. Shares -2.8% premarket. (PR)
• BJ's Wholesale Club (BJ): Q1 EPS of $0.45 beats by $0.01. Revenue of $2.31B (+0.3%) in-line. Full-year EPS guidance of $2.44-2.54 in line. (PR)
• Cato (CTR): Q1 EPS of $0.64 beats by $0.02. Revenue of $238M (+5.4%) vs. $241M. Sees Q2 EPS of $0.48-0.54 vs. $0.34. (PR)
• Deere (DE): FQ2 EPS of $1.11 beats by $0.04. Revenue of $6.19B (-17.2%) vs. $6.6B. Sees full-year equipment sales down 19%. "The outlook for market conditions over the remainder of the year remains highly uncertain and the impact on the company's sales and earnings is difficult to assess." Shares -3% premarket. (PR)
• Netease.com (NTES): Q1 EPS of $0.47 beats by $0.01. Revenue of $114.4M (+19.9%) vs. $116M. (PR)
• Target (TGT): Q1 EPS of $0.69 beats by $0.10. Revenue of $14.36B (+0.4%) vs. $14.81B. Net writeoffs of $301M. Allowance for doubtful accounts was flat at $1B. Says both retail and credit-card segments seemed to stabilize. Shares +4.7% premarket. (PR)
• Toll Brothers (TOL): Q2 home-building revenue fell 51% to $388M. Units sold fell 47% to 648. Backlog down 55% to $994M. Net signed contracts down 40% to $298M. Cash position increased to $1.96B from 41.53B last quarter. Continued to reduce the number of lots it controls. Says it has "a few reasons for cautious optimism," mainly that deposits were higher for seven of nine weeks vs. the same weeks last year. Shares +2% premarket. (MW)
• Tween Brands (TWB): Q1 EPS of -$0.06 beats by $0.13. Revenue of $205M (-18.5%) vs. $221M. Comps -23%. Inventories -22.5% vs. a year ago. Shares +27.8% premarket. (PR)

Earnings: Tuesday After Close

• Analog Devices (ADI): FQ2 EPS of $0.21 beats by $0.12. Revenue of $475M vs. $427M. Issues upside guidance for Q3, sees EPS of $0.17-0.19 vs. $0.11 consensus, revenue of ~$475M vs. $442M consensus. Shares +8.1% AH. (PR)
• Hewlett-Packard (HPQ): FQ2 EPS of $0.86 in-line. Revenue of $27.35B (-5.0%) vs. $27.42B. Issues in-line EPS guidance for Q3 of $0.88-0.90, sees Q3 revenue flat to down 2%. Reaffirms guidance for FY '09, sees EPS of $3.76-3.88 and revenue down 4-5%. Shares -3.1% premarket. (PR)

Today's Markets

Overseas markets were mixed Tuesday. Futures are moderately higher.

• Lehman shops 50% stake, comes up empty-handed. Sources say Lehman (LEH) held secret talks to sell a 50% stake to South Korean Korea Development Bank or Chinese Citic Securities at the beginning of August. They balked after concluding Lehman's price - 50% higher than its book value - was too high. Citic denies having had any formal talks with Lehman; KDB was mute.
• Shhh... The Fed is listening. The Fed quietly called Credit Suisse (CS) last month to ask if there was truth to rumors it pulled a major credit line from Lehman (LEH), sources say. CS told Fed officials it didn't, and had no plans to. The Fed appears to be growing more active in its policing of groundless speculation and rumor-mongering, after cascading rumors helped nail Bear Stearns in March. "You don't want to upset the Fed," a senior banker says.
• Citigroup takes revenge on rivals. Citigroup says Lehman Brothers (LEH), Goldman Sachs (GS) and Morgan Stanley (MS) may incur further writedowns on mortgage-backed assets. Analyst Prashant Bhatia expects Lehman to take fresh asset-related writedowns of $2.9B, GS to writedown $1.8B, and MS to writedown $1.7B. However, he notes Lehman can absorb over $3B in after-tax losses without needing to raise capital, making a much-touted asset sale "lower probability." Bhatia also slashed EPS estimates on LEH and GS.
After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
• GSE backstop misfire? "U.S. Treasury Secretary Henry Paulson's 'bazooka' may be intimidating the same investors he intended to reassure," Bloomberg says. Last month Congress granted Paulson the power to backstop government-sponsored Fannie Mae (FNM) and Freddie Mac (FRE) in the 'unlikely' scenario it proved necessary. It now appears the threat of the government stepping in has created additional uncertainty that has raised the GSEs' borrowing costs and pummeled their shares. "It is the lack of clarity of what exactly the government is going to do, and what Congress is going to do, that is sending shivers" through the markets, portfolio manager Axel Merk says.
• More big losses for high flyers. The head of the International Air Transport Association says airlines could lose more than $6.1B in 2008 due to high oil prices and geopolitical instability. "We are bracing for more situations of airlines collapsing" IATA CEO Giovanni Bisignani says. "We are a fragile industry in a crisis." He thinks further industry consolidation is likely, but hopes the crisis will spur a much-needed overhaul to airlines' broken business frameworks.
• ARS probe moves to brokers. Regulators will broaden their probe of brokers who sold clients illiquid auction-rate securities next week, sources say. Yesterday, NY AG Andrew Cuomo said he subpoenaed more firms, including Fidelity, Schwab (SCHW) and Oppenheimer. The move marks the next step in the government's probe, which initially focus on the underwriting banks rather than the retail brokers. "If downstream brokerages deliberately stuck their heads in the sand but continued to actively market these products to unknowing investors, that will certainly be relevant to our calculus of our firms' culpability," Cuomo said yesterday.
• OECD growth is slowest in 7 years. Battered by the credit crunch and inflation, developed economies grew at the slowest pace in almost seven years during Q2. Combined GDP growth for the 30 OECD countries was a meager 0.2% on the previous quarter, vs. 0.5% in Q1, and +1.9% on the previous year. The OECD cuts its 2008 and 2009 growth forecasts for its member countries to 1.8% this year and 1.7% next vs. an earlier forecast of 2.3% and 2.4% respectively.
• Mizuho injects $120M into Evercore. Evercore Partners (EVR) will get a $120M cash infusion from Japan's Mizuho (MFG), the latest in a series of U.S. I-banks seeking capital from abroad. Evercore will use the funds to shore up its struggling private-equity arm.
• Temasek may bet on Merrill rebound. Temasek Holdings, the biggest shareholder in Merrill Lynch (MER), may buy a larger stake in a bet the firm will rebound. Temasek, Singapore's sovereign wealth fund, paid $5B in December for around 5% of Merrill's stock, and last month committed to an additional $900M. Merrill's shares are down 55% since Temasek's December stake. The new purchase will require regulatory approval since it would push Temasek's stake beyond the 10% limit for foreign investors.
• MBA Mortgage Applications fell 1.5% from last week. The 30-yr. fixed mortgage rate fell to 6.47% from 6.57%.
• EIA inventories. Crude +9.39M vs. consensus of +0.9M. Gasoline -6.2M vs. -3M. Distillate +0.5M vs. +0.3M. Crude futures, which had been trading higher, dropped sharply, but rallied to finish the day up 1.37% to $116.11. In overnight trading, futures are up 1.38% to $117.16. Bullish factors include Goldman reasserting $149 oil by year-end, Russia kicking up a fuss over the U.S.-Poland missile shield, and increased tensions in the Russia/Georgia conflict.
• Europe manufacturing, service sectors shrink. Europe's manufacturing and service sectors contracted for the third consecutive month, though slightly less than expected, as July's record high oil prices hit consumer and business demand. "There are simply too many headwinds," ING economist Martin Van Vliet says. "There remains a risk that the region's economy will contract in the third quarter." (ETF: IEV)
• U.K. retail sales bounce. A small bright spot in the U.K. among grim economic indicators: retail sales rose an unexpected 0.8% in July on strong sales at discounters, as shoppers shunned department stores. Still, economist Vicky Redwood warned the cheer may be short-lived. "Retail sales figures will get worse later in the year" as housing-market weakness and high inflation trickle through to consumer spending. Meanwhile, the BoE cut its growth outlook amid increasingly poor economic indicators. A U.S.-style stimulus package is unlikely due to already-high government borrowing, leaving the BoE with few options. (ETF: EWU)

Earnings: Thursday Before Open

• Burger King (BKC): FQ4 EPS of $0.37 beats by $0.03. Revenue of $646M (+9.5%) vs. $635M. [PR]
• Cato (CTR): Q2 EPS of $0.41 in-line. Revenue of $234M (+5.4%) in-line. [PR]
• Dick's Sporting Goods (DKS): Q2 EPS of $0.39 beats by $0.03. Revenue of $1.09B (+7.2%) in-line. [PR]
• Frontline (FRO): Q2 EPS of $2.18 misses by $0.15. Revenue of $547.5M (+57.8%) vs. $402M. [PR]
• Heinz (HNZ): FQ1 EPS of $0.72 beats by $0.06. Revenue of $2.58B (+14.9%) vs. $2.46B. [PR]
• Hormel Foods (HRL): FQ3 EPS of $0.38 misses by $0.01. Revenue of $1.68B (+10.4%) vs. $1.62B. [PR]
• Stage Stores (SSI): Q2 EPS of $0.25 beats by $0.02. Revenue of $373M (+3.8%) in-line. [PR]
• The Children's Place (PLCE): Q2 EPS of -$0.03 beats by $0.40. Revenue of $338M (+16.4%) in-line. [PR]

Earnings: Wednesday After Close

• Bally Technologies (BYI): FQ4 EPS of $0.54 beats by $0.01. Revenue of $247M (+22%) in-line. Shares +6.6%. [PR]
• Gymboree (GYMB): Q2 EPS of $0.27 beats by $0.03. Revenue of $203M (+12.7%) in-line. Shares +0.8%. [PR]
• Hot Topic (HOTT): Q2 EPS of -$0.01 beats by $0.01. Revenue of $167M (+3.2%) in-line. Shares -9.75%. [PR]
• JDS Uniphase (JDSU): FQ4 EPS of $0.07 misses by $0.03. Revenue of $390M vs. $396M. Sees FQ1 revenue of $378-394M vs. $399.5M. Shares -1.8%. [PR]
• Limited Brands (LTD): Q2 EPS of $0.27 beats by $0.07. Revenue of $2.28B in-line. Sees 2008 EPS of $1.45-1.60 vs. $1.48. Shares +6.3%. [PR]
• Longs Drug Stores (LDG): Q2 EPS of $0.78 beats by $0.02. Revenue of $1.33B (+4.6%) in-line. [PR]
• Phillips-Van Heusen (PVH): Q2 EPS of $0.66 beats by $0.01. Revenue of $561M (+1.6%) vs. $580M. Sees Q3 EPS of $1.07-1.13 vs. $1.21. Shares -3%. [PR]
• Salesforce.com (CRM): Q2 EPS of $0.08 in-line. Revenue of $263M (+48.9%) in-line. Shares -9.3%. [PR]
• Semtech (SMTC): Q2 EPS of $0.25 beats by $0.02. Revenue of $78M (+16.4%) in-line. Shares -1.3%. [PR]

Today's Markets

• Asia markets closed broadly lower Thursday. Nikkei -0.77% to 12,752. Hang Seng -2.58% to 20,392. Shanghai -3.63% to 2,432. BSE -2.96% to 14,244.
• Europe is lower at midday. London -0.43%. Paris -1%. Frankfurt -0.82%.
• U.S. futures drifted lower in overnight trading. Dow -0.34%. S&P -0.35%. Nasdaq -0.43%. Crude +1.33% to $117.10. Gold +1.73% to $830.40.

Thursday's Economic Calendar

• 8:30 Jobless Claims
  10:00 Leading Indicators
  10:00 Philadelphia Fed Survey
  10:35 EIA Natural Gas Report
  4:30 PM Money Supply
• Notable earnings before Thursday's open: BKC, BKS, DKS, FRO, GME, HNZ, PDCO, PLCE
• Notable earnings after Thursday's close: ARO, BCSI, DRYS, FL, FMD, GPS, HIBB, INTU, PSUN, WTSLA

Seeking Alpha editor Rachael Granby contributed to this post.

There is a commonly told myth that says that companies that pay a dividend misallocate funds that could be used to generate new revenue or grow the company. According to this myth the lack of growth in the company will keep the stock's price low over the short and long term. This is the most fascinating misconception that exists about dividend paying companies. The theory seemingly makes sense, yet after critical examination, the truth comes out.

The following is the performance of Dividend Achievers in the last year from August 8, 2007 until August 8, 2008. These stocks either hit a new low within the year and moved higher from there, or they have started the year at a low and continued upward. Keep in mind that the percentage change of these stocks does not include the annual dividend that would have been received over the same period of time and just looks at stock appreciation.

• IEA sees crude crunch. "The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand." Previously, the IEA had forecast crude-and-equivalents supply rising to 116M barrels/day by 2030, up from a present 87M -- enough to meet demand forecasts. Now it is worried companies may struggle to hit 100M. "The oil investments required may be much, much higher than what people assume," IEA chief economist Fatih Birol says. "This is a dangerous situation." That, coupled with a 5.32M drop in U.S. inventories to 320.4M, saw oil top $135 in overnight trading. It's up 19% over the past month.
• BCE buyout stymied; could be biggest-ever deal to collapse. The Quebec Court of Appeal issued a surprise ruling allowing bondholders to challenge BCE's (BCE) $52.9B leveraged buyout because the company failed to consider their interests. Bondholders say the acquisition increases BCE's risk of debt default."The decision effectively terminates the proposed transaction," a lawyer for the bondholders says. The ruling comes amid reports the financing banks were trying to renegotiate terms. BCE and its buyers (Ontario Teachers' Pension Plan, Providence, and Merrill Lynch's (MER) private-equity arm) said they will seek leave to appeal to the Supreme Court of Quebec.
• UBS struggles to sell itself. UBS (UBS) revealed the pricing of its recent $15.5B rights issue: Investors received shares at a 31% discount to yesterday's close. Apparently UBS's offering failed to entice buyers; the price is considered an embarrassment for the firm. UBS also finalized its $15B debt sale to BlackRock (BLK) yesterday. Shares have gained 11% since the rights issue was announced on Apr. 1.
• NRG confirms Calpine bid. NRG Energy (NRG) made an unsolicited $9.6B offer for Calpine (CPN), a deal that would make it the #1 independent power company in the U.S. The all-stock offer of 0.534 share per Calpine share is a 6.7% premium. "Calpine is an almost pure play on gas-fired generation, so their carbon footprint would be attractive," as companies seek to limit their carbon-dioxide emissions, Calyon analyst Gordon Howald says. "It would be unparalleled. There is nothing like this in the competitive power generation industry," NRG CEO David Crane said. "It's really the ideal that people have talked about from time to time."
• AMR dives on dismal outlook. Shares of American Air parent AMR Corp. (AMR) plummeted 24.15% Wednesday after it announced significant reductions to its 2008 domestic flight schedule and outlined plans to retire at least 75 aircraft -- a response to record fuel prices, economic softness, and a difficult competitive environment. "The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak U.S. economy," CEO Gerard Arpey said. American yesterday introduced a $15 fee for the first checked bag.
• Fed likely to stay put. Minutes from the April 29-30 FOMC meeting revealed the Fed's decision to cut its target rate to 2% was a "close call" and that it would be reluctant to cut rates further, even in the face of continuing economic weakness. "The risks to growth were now thought to be more closely balanced by the risks to inflation. Accordingly, the Committee felt that it was no longer appropriate for the statement to emphasize the downside risks to growth," the minutes said.
• AIG under attack. The Jacksonville Police and Fire Pension Fund is suing American International Group (AIG) along with several of its executives for inflating its share price by understating its exposure to subprime mortgage losses. The lawsuit alleges AIG's Q1 loss of $7.8B shocked investors after the firm assured them any losses on credit insurance would be limited.
• AstraZeneca sued over drug marketing. The Arkansas AG is suing AstraZeneca (AZN) for falsely claiming its antipsychotic medicine Seroquel was safer than less-expensive drugs, and failing to warn patients of its risks. Seroquel produced over $4B in sales in 2007, second to Nexium among AZN's top sellers.
• Worse than smoking? Pfizer's (PFE) anti-smoking drug Chantix has been linked to more than 3,000 reports of serious side-effects including suicide and heart trouble, a new study says. The FAA Wednesday banned the pill for its pilots. "These data provide a strong signal that the risks have been underestimated, and show that a wide spectrum of serious injuries are being reported in large numbers," the nonprofit Institute for Safe Medication Practices said in its report.

Earnings: Wednesday After Close

• CITI Trends (CTRN): Q1 EPS of $0.36 beats consensus of $0.34. Revenue of $121M (+13.5%) in line. Comps +0.3%. Sees 2008 EPS of $1.10-1.15, short of consensus of $1.14 and full-year comps +2-3%.
• Computer Sciences (CSC): FQ4 EPS of $1.44 beats consensus of $1.40. Revenue of $4.48B (+10.9%) vs. consensus $4.43B. Sees 2009 EPS of $4.20-4.40 in-line.
• Gymboree (GYMB): Q1 EPS of $0.86 beats consensus of $0.84. Revenue of $242M (+15.7%) in-line. Sees Q2 EPS of $0.18-0.20, short of consensus of $0.21. Sees 2008 EPS of $3.10-3.15 in-line.
• Hot Topic (HOTT): Q1 EPS of -$0.03 beats consensus of -$0.04. Revenue of $159M (+1.1%) in-line. Sees Q2 EPS of -$0.02 to -$0.04 in-line.
• Jackson Hewitt (JTX): Says it prepared 3.45M tax returns in 2008, -5.3%. Sees full-year EPS of $1.34-1.39, short of previous guidance of $1.48-1.60, vs. consensus of $1.51. Sees full-year revenue of $282-292M vs. consensus of $278M.
• Limited (LTD): Q1 EPS of $0.11 beats consensus of $0.08. Revenue of $1.925B (-16.7%) in-line. Sees Q2 EPS of $0.16-0.20 in-line. Sees full-year EPS of $1.38-1.58, better than consensus of $1.41.
• Longs Drug Stores (LDG): Q1 EPS of $0.63 beats consensus of $0.60. Revenue of $1.41B (+8.5%) in-line. Sees full-year revenue +5-7% (= $5.5-6B vs. 5.53B consensus).
• Napster (NAPS): FQ4 EPS of -$0.10 beats consensus of -$0.13. Revenue of $30.8M in-line.
• NetApp (NTAP): FQ4 EPS of $0.38 beats consensus of $0.36. Revenue of $938M (+17.1%) in-line. Sees FQ1 EPS of $0.20-0.23, short of consensus of $0.27, and revenue of $845-875M vs. consensus of $871M. Sees 2009 EPS of $1.40-1.46 in-line.
• Netease.com (NTES): Q1 EPS of $0.30 misses consensus of $0.31. Revenue of $93M vs. consensus of $82M.
• Nordson (NDSN): FQ2 EPS of $0.97 beats consensus of $0.83. Revenue of $294M (+21.9%) vs. consensus of $280M. Sees Q3 EPS of $0.91-1.01, better than vs. consensus of $0.88.
• Perry Ellis (PERY): Q1 EPS of $0.60 beats consensus of $0.55. Revenue of $243.5M (+6.4%) vs. consensus of $234M. Sees full-year EPS of $1.95-$2.00, short of consensus of $1.99, and revenue of $910-925M vs. consensus of $922M.
• PetSmart (PETM): Q1 EPS of $0.32 just beats consensus of $0.31. Revenue of $1.20B (+9.1%) in-line. Comps +2.9%. Sees Q2 EPS of $0.26-0.30, short of consensus of $0.34, and comps growth in the low-single digits. Sees 2008 EPS of $1.51-1.59, better than consensus of $1.51.
• Salesforce.com (CRM): Q1 EPS of $0.08 beats consensus of $0.07. Revenue of $248M (+52.5%) vs. consensus of $236M. Net paying customers +2,600 to 43,600. Sees Q2 EPS of $0.07-0.08 in-line, and revenue of $258-259M vs. consensus of $251M. Raises full-year revenue guidance to $1.065B from $1.06B, vs. consensus of $1.05B.
• Semtech (SMTC): Q1 EPS of $0.22 beats consensus of $0.20. Revenue of $74.4M (+22.9%) vs. consensus of $72M. Sees Q2 EPS of $0.23-0.24, better than consensus of $0.22.
• Synopsys (SNPS): FQ2 EPS of $0.41 beats consensus of $0.38. Revenue of $325M (+10.8%) vs. consensus $321M. Sees FQ3 EPS of $0.38-0.40 in-line and revenue of $335-343M vs. consensus of $330M.

Earnings: Thursday Before Open

• Ann Taylor (ANN): Q1 EPS of $0.47 beats consensus of $0.46. Revenue of $592M in-line. Comps -4.3%. Sees Q2 EPS of $0.42-0.47, short of consensus of $0.47. Sees 2008 EPS of $1.80-1.90, short of consensus of $1.88. Sees 2008 comps slightly negative.
• Barnes & Noble (BKS): Q1 EPS of $0.04 misses consensus of $0.05. Revenue of $1.2B in-line. Full-year EPS of $1.70-1.90 in-line.
• Bon-Ton Stores (BONT): Q1 EPS of -$2.03 beats consensus of -$2.25. Revenue of $700M vs. consensus of $715M. Sees full-year EPS of $0.00-0.30, better than consensus of -$0.35.
• The Buckle (BKE): Q1 EPS of $0.61 beats consensus of $0.57. Revenue of $160M vs. consensus of $155M. Comps +25.6%.
• Casual Male Retail (CMRG): Q1 EPS of -$0.01 misses consensus of $0.02. Revenue of $107.6M vs. consensus of $110.15M. Sees 2008 EPS of $0.25-0.30, better than consensus of $0.24.
• Cato (CTR): Q1 EPS of $0.58 misses consensus of $0.60. Revenue of $229M in-line. Comps -2%. Sees Q2 EPS of $0.28-$0.33, better than consensus of $0.24. Sees 2008 EPS of $0.80-0.95, in-line.
• Dicks Sporting (DKS): Q1 EPS of $0.18 in-line. Revenue of $912M vs. consensus $926M. Sees Q2 EPS of $0.34-0.38, short of consensus $0.43. Comps are expected to decrease 4-7%.
• Flowers Foods (FLO): Q1 EPS of $0.39 beats consensus of $0.35. Revenue of $677M vs. consensus of $666.5M. Raises full-year EPS outlook to $1.15-$1.23 from $1.07-$.17, vs. consensus of $1.14.
• Frontline (FRO): Q1 EPS of $2.50 beats consensus of $2.38. Revenue of $393.5M (+44.1%) in-line.
• GameStop (GME): Q1 EPS of $0.37 beats consensus of $0.35. Revenue of $1.81B vs. consensus of $1.72B. Sees Q2 EPS of $0.26-0.28 vs. consensus of $0.26. Sees Q2 comps up 12-14%.
• Hormel Foods (HR): FQ2 EPS of $0.56 just beats consensus of $0.55. Revenue of $1.59B in-line. Sees full-year EPS of $2.30-2.40, short of consensus $2.37.
• Mentor Graphics (MENT): Q1 EPS of -$0.10 in-line. Revenue of $179M vs. consensus $170M. Sees full-year EPS of $1.05-1.10, better than vs. consensus of $1.03, and revenue of $915M vs. consensus of $901M.
• Patterson Companies (PDCO): FQ4 EPS of $0.51 in-line. Revenue of $778M vs. consensus of $800M. Sees FQ1 EPS of $0.38-0.40 vs. consensus of $0.40. Sees full-year EPS of $1.94-1.98 vs. consensus of $1.94.
• Sanderson Farms (SAFM): FQ2 EPS of $0.30 beats consensus of -$0.07. Revenue of $434M in-line.
• Stage Stores (SSI): Q1 EPS of $0.06 in-line. Revenue of $353.5M in-line. Sees Q2 EPS of $0.17-0.23, better than consensus of $0.15, and revenue of $360-368M vs. consensus of $368M, and comps down 3%-5%.
• Stein Mart (SMRT): Q1 EPS of $0.17 beats consensus of -$0.04. Revenue of $352M vs. consensus of $366M.
• Suntech Power (STP): Q1 EPS of $0.35 beats consensus of $0.27. Revenue of $434.5M (+76.1%) vs. consensus of $377M. Sees Q2 revenue of $430-440M vs. consensus of $428M. Sees full-year Revenue of $1.9-2.1B vs. consensus of $1.98B. Says it's virtually sold out for the year.
• Tech Data (TECD): Q1 EPS of $0.43 beats consensus of $0.42. Revenue of $6.07B vs. consensus of $5.74B. Sees Q2 revenue of $6-$6.2B vs. consensus of $5.66B.
• Zale (ZLC): FQ3 EPS of -$0.42 in-line. Revenue of $477M vs. consensus $458M. Comps +5.8%.

Today's Markets

• Asia: Nikkei +0.37% to 13,978. Hang Seng -1.64% to 25,043. Shanghai -1.65% to 3,486. BSE Sensex -1.93% to 16,911.
• Europe: FTSE +0.25% to 6,214. CAC -0.49% to 5,004. DAX -0.45% to 7,011.
• U.S. futures are up slightly at 7:10 AM. Dow +0.15% to 12,638. S&P +0.13% to 1,394.75. Nasdaq +0.08% to 1,966.
• Gold -0.65% to $923. Crude +0.39% to $133.72. High for the July contract: $135.09.

Stocks discussed in the lightning round session of Jim Cramer’s Mad Money TV program, Thursday, May 1. Click on a stock ticker for more analysis:

Bullish calls:

Wal-Mart (WMT): “ …We're only buying four retailers... we're buying Costco, we’re buying TJX, we're buying Urban Outfitters, and we're buying Wal-Mart.
Costco (COST), TJX Companies (TJX), Urban Outfitters (URBN)
Marvel Enterprises (MVL): “I'm in Ironman, so it's definitely big... and I think MVL is a winner. Their movie gambit turned out to work. I would pull the trigger, ahead of the big opening.”

Stocks discussed in the lightning round session of Jim Cramer’s Mad Money TV program, Thursday May 1. Click on a stock ticker for more analysis:

Bullish calls:

Wal-Mart (WMT): “ …We're only buying four retailers... we're buying Costco, we’re buying TJX, we're buying Urban Outfitters, and we're buying Wal-Mart."
Costco (COST), TJX Companies (TJX), Urban Outfitters (URBN)
Marvel Enterprises (MVL): “I'm in Ironman, so it's definitely big... and I think MVL is a winner. Their movie gambit turned out to work. I would pull the trigger, ahead of the big opening.”

In the last bear market, we all learned that “earnings” aren’t necessarily earnings; now we are learning that “cash” isn’t necessarily cash and “AAA” isn’t necessarily AAA. To repeat what I have stated on many occasions now: This is not the time to be reaching for yield. As I shared in November, July and May, companies that are well-capitalized with a history of sustainable dividend growth may provide shelter from the storm. Part of my thesis is that these conservative growth stocks will become increasingly in demand as aging baby boomers transition their accounts towards higher income generation and less speculative growth. With pressure on companies that traditionally access capital markets to fund growth, many traditional income-oriented securities (REITs, MLPs) have and may continue to perform very poorly.

The screen that I continue to monitor (using StockVal) is designed to identify companies that pay sustainable and growing dividends that yield in excess of 2%. Specifically:

Retailers reported November same-store sales Thursday. Results were mixed, following two straight months of unusually weak sales growth and estimate misses. More seasonal temperatures and an extra-week of post-Thanksgiving shopping help prop up results for some firms. Conversely, high gas prices continued to plague shoppers, making shopping trips more expensive and eroding consumer confidence. Estimate-missers said economic concerns also hurt sales.

Retailers reported October same-store sales Thursday, posting a second-straight month of weak sales growth and estimate misses. Once again, retailers said warmer-than-usual weather took a toll on winter merchandise sales. Rising gasoline prices were another source of consternation, making shopping trips more expensive and eroding consumer confidence.

Most retailers reported their September same-store sales Thursday. It was a weak month for the sector, with warmer-than-usual weather taking its toll on winter merchandise sales. Collective same-store sales for the retailers in the chart below were down 1.4% from a year ago, while net sales gained a paltry 1.8% over the month. Retailers missed analyst same-store sales forecasts by an average of 1.5%. Weak housing prices have lead to a drop in consumer confidence, which is now being felt at the cash register. On Wednesday, a Piper Jaffray & Co. survey showed that while teenagers' spending is unchanged from a year ago, parents are limiting purchases both for their children and themselves (full story).

Most retailers reported their August same-store sales Thursday. Collectively the month, during which retailers on average beat analyst estimates by 1.0%, was a welcome change from July, when retailers missed forecasts by an average of 1.5% and almost 75% of retailers posted below-estimate sales gains. On average, same-store sales were up 2.4% from the year ago period, while total sales climbed 6.2% year-over-year. Saks and Zumiez nearly doubled analyst estimates, the latter posting an impressive 39.7% total sales gain. Other upside notables included Pacific Sunwear (9.6% vs. 1.8%) and Wal-Mart's surprising 3.0% same-store sales jump; analysts expected a milder 1.5%. Decliners included Chico's FAS and Gottschalks. Much-watched Costco posted a 2.0% same-store sales gain, well below the 5.6% analysts forecasted.

Retailers reported July same-store sales Thursday. Collectively, the month was a weak one for the sector. On average, retailers missed the forecasts of analysts surveyed by 1.5%, with almost 75% of retailers posting below-estimate sales gains. Notable beats include Nordstrom, which doubled analyst estimates of 4.5% same-store sales growth, and Saks, who posted a 14.9% gain vs. a 5.6% loss in June. Big losers included Abercrombie & Fitch, which saw same-store sales fall 4.0% vs. expectations of a milder -0.9%; Aeropostale lost 11.9% vs. forecasts of a 1.6% gain; American Eagle, who was expected to gain 3%, lost 6%; and Pacific Sunwear missed forecasts of a 3.6% gain, dropping 4.6%. Much-watched retailers Costco and Wal-Mart both bested expectations. Retail sales from February through June climbed 2.3% vs. 3.9% in 2006, according to ICSC chief economist Michael Niemira. Some consumers don't feel as wealthy because of declining home values, he said. "We're just not at a stage where there's anything compelling for the consumer to buy, and the consumer doesn't really feel like buying much," said Brean Murray Carret & Co. analyst Eric Beder. "The fall season will be very difficult outside of back-to-school."

With the low interest rate environment that has persisted for the past 7 years, and with the 10-year Treasury below 5.5%, investors have been searching for higher yielding investments. This process has led to higher interest in things like Junk Bonds, REITs and MLPs. Not surprisingly, the relative yields of those types of investments has compressed greatly, though in recent months the relative differences have been increasing.

As the U.S. economy slows amidst a booming global economy, we suddenly find ourselves in a tough spot. Rates are rising overseas almost universally, but here, where we are seeing the mortgage lending excesses over the past many years shed light on other excesses, Treasury rates are actually falling in what is known as a “flight to quality”.

Retailers reported mixed June same-store sales on Thursday. Collectively, retailers beat analyst expectations by 0.1%. On average, same-store sales growth in June was 2.1% weaker than May's stronger numbers. Notable beats include Wal-Mart's decisive 2.4% growth, way outdoing analyst forecasts of only 0.8% and Macy's weaker-than-expected 2.7% decline (vs. -1.9% estimates). Retail sales growth from February through June 2007 has been at about half of 2006's pace over the same period. Susquehanna analyst Thomas Filandro said on July 9 mall traffic "remained sluggish," while another analyst said retailers are "just trying to minimize their losses."