Oil Up, Dollar General Complains, GM & Ford Debt Downgraded, and Eastman Kodak Cuts Jobs (DG, EK, F, GM)

Includes: DG, F, GM, KODK
by: Tony Sagami
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$67.49. That’s what oil closed at today. You’d think that would be enough to scare some sense in to the bulls, writes Tony Sagami, owner and founder of Harvest Advisors. Not hardly. The Dow Jones was able to put together a 15-point gain today and the Nasdaq was up by even more on a percentage basis.

Heck, even the Dow Jones Transportation Average was up today.

So...is the glass half full or half empty? I suspect the bulls are pretty proud of their ability to keep the market from falling apart in the face of $67 oil and 10 interest rate hikes. I, on the other hand, believe that the disconnect between reality and stock prices will ultimately lead to a painful stock market fall.

Could I be wrong? You bet. But that doesn’t mean that you should ignore risk management strategies like stop losses, swapping out of high beta stocks, watching for drops below important support levels, raising cash, and otherwise development a plan of action if conditions turn ugly.

My kids think it is a waste of time, but once a year or so, I run them through a fire drill. They roll their eyes, play along, and think I’m wasting their time. But my family will be prepared if there is a fire.

I hope your portfolio has been run through a Wall Street fire drill. You need to be prepared if things start to get very hot.

Dollar General (ticker: DG) complains about energy costs. Discount store Dollar General didn’t have any problem hitting its Q2 profit numbers, but it uttered what is becoming a standard complaint from corporate America: painfully high energy prices!

The Company believes that consumer discretionary spending has been greatly impacted in August due to the combination of fuel prices and aggressive back-to-school marketing and discounted pricing by competitors.

Higher transportation costs, primarily resulting from increased fuel expenses.

No wonder Dollar General’s Q2 profit margins dropped from 29.2% last year to 28.6 this year.

Worse yet, Dollar General told Wall Street to tone down its Q3 expectations. Instead of 25 cents, Dollar General now only expects to make 21 to 24 cents instead.

Stay the heck away from retail stocks?

Fed head warns of more rate hikes. Michael Moskow, president of the Federal Reserve Bank of Chicago, warned that the Fed would continue to raise interest rates to fight inflation.

Moskow warned that not raising rates would result in “significantly higher inflation.