29 November, 2007

Sears still suffering Retail Blues in Latest Quarter

The magic that was supposed to be a turn-around at Sears Holdings (SHLD) has seemed to fizzle lately with a whimper. Sales are declining, there's nothing to buy on the horizon, and if the only consolation Investors have is stock buy-backs then something is definitely awry.

The run Sears had from 2006 to early this year where the stock almost doubled on the strength and possibilities of cash being used to purchase other retailers and Ed Lampert running the company like a giant hedge fund has now been completely wiped out with the latest quarterly retail set back. Sears at $105 sits at the same point as it was at the end of 2004. All that Investor promise and cheering for Sears to do big things with its cash lately have led to nothing. Earlier Sears was able to maneuver, take in K-Mart stores and tried to wholly take in Sears Canada, but the rumors of further purchases that pushed the stock are now working against the retailer.

The current quarter showed just how dire the retail situation is for Sears. Net Income of only $2Million or $0.01/share versus $1.27/share a year ago (with $196Million in income). Now granted, $101Million last year was due to Lampert's investment gains in highly complex Total Return Swaps, which for reference, is a type of investment strategy where one party gets paid periodically for taking on risk, while another gets an almost fantasy-based fixed payment. For those really interested in these types of investments I suggest looking up Credit Derivatives and Total Return Swaps on Google or Wikipedia as a primer.

The bottom line here is that Revenue and Income are both slowing in line with slowing retail sales. Revenue this quarter was $11.5Billion versus $11.9Billion last year and store sales declined 4.5% year over year. The biggest kick of all to the negative side is that margins are falling further and faster than expected, meaning that Sears is a) having trouble getting people into the stores and b) having trouble selling them even cheaper items.

So somethings gotta give here and if Investors are to continue to have faith in this retailer there has to be some signs of mobility and business sense. The only thing going on with Sears in the backrooms these days seems like more Stock Buy Back plans. In fact in the current quarter Sears bought back almost $1Billion in stock. Which in the short term is without a doubt a positive for the company, but if the retail business can't produce cash flows that have any meaning to the war chest, then there certainly wont be many more quarters left where Sears can afford to keep buying back stock.

Right now I'd avoid Sears Holdings until management says anything meaningful and positive on the retail or acquisition side.

Disclosure: Author holds no position in SHLD

28 November, 2007

Markets extend Recovery Effort to 2nd day Wednesday

Major Market indices got another substantial boost Wednesday as stocks across the board rose higher led by Technology and the Financials. The Dow rose more than 330 points while the Nasdaq rose over 80 points. On the Canadian side the TSX rose more than 260 points.

Investors seemed to rekindle hopes for another Rate Cut as the Federal Reserve statements hinted at the possibility. On the recovery path were major and sub-prime financial players such as Citigroup (C), Bank Of America (BAC), Washington Mutual (WM), NovaStar Financial (NFI) and Countrywide Financial (CFC). Traders were keying on news tidbits that helped ease doubts about liquidity problems for the Financial companies particularly from CFC, which said that its "Cash Lines" are intact. That didn't help the embattled lender on the day very much but it spurred the thinking that the bigger players will turn the ship around soon enough, given their sizable asset and normal banking customer base. Citigroup and WM were among the big turnarounds today, moving almost 7%, while BAC was up 4.5%.

The Canadian markets saw a big rebound in the banking sector as well as the major Canadian Financial Institutions like Royal Bank (TSE:RY), CIBC (TSE:CM), Bank Of Nova Scotia (TSE:BNS) and TD Bank (TSE:TD) were all high percentage gainers.

The bigger news on the day, sparking the rally was talk of the Federal Reserve and its plans, going into the next Rate meeting. That meeting is set to take place in early December and Investors hope comments of "offsetting policy" and the rise of commodities such as Oil and Gold will lead to another cut. The long term effects of a rate cut will also produce negatives but at this point Traders are concerned about having the necessary shorter-term buying catalysts going into the end of the year.

26 November, 2007

Markets Start Post-Thanksgiving with Monday Afternoon Slide

The day started with promise after a Friday market session that had stocks broadly up. Some concerns over consumer spending were eased as reports came out estimating the number of shoppers in the US over the holiday weekend actually increased against last year. The markets were battered later after more credit concerns in the banking world came to light. Specifically from Citigroup (C).

The retail shopping data provided an early boost as a tracking data point (of approximately 50,000 stores) showed a 7% year over year increase in consumer spending. The fears that the credit crunch would curtail spending seemed to be forgotten for the time being. The positive vibe of the market was erased in the afternoon as more bad news poured out of the financial sector.

Citigroup announced some cost-cutting plans effective immediately, which led to speculation of job cuts and further write-downs. The major bank may have to include an over $8Billion write-down next quarter. This bad news trickled throughout most of the financial sector and Citigroup shares fell under $30. This company is surely in bad shape these days and a recovery effort will be a bitter pill to swallow for investors but may be a necessity before the $40s are seen again.

The major averages were all down around 2% Monday, with the Dow losing almost 240 points. The S&P benchmark with today's loss dropped into the negatives on the year and as it is the tracking average for most mutual funds Investors will surely be disappointed in their next statements.

I think there's some hope here for a recovery but the time-frames are shifting every month that's filled with continued bad news. We've heard it several times, that things will get worse before they get better, but investors can't shake off bad news with the fragile state the financial sector is in right now. It's got to be a holding pattern investment-wise until someone, somewhere shines a light on the sector.

Disclosure: Author owns C

19 November, 2007

Amazon unveils Kindle E-Book Reader, Will it Hit with Customers and Shareholders?

Amazon (AMZN) has seen a resurgence on Wall Street this year as the company has tried to change the way it does business with an influx of technology spending. Financial results has been excellent but technology results have been mixed, with the difficult to manage and use Unbox Video Service and the new and promising MP3 store. The latest offering from the Tech department at Amazon in the Kindle E-Book Reader.

It's official unveiling was today, but technology blogs and news sites have been after the device for sometime. Popular spots; Engadget (Link) and Gizmodo (Link) were on top of this latest gadget all morning. CEO Jeff Bezos claimed that he hoped Kindle would do for books what the iPod did for music online. Amazon shareholders certainly hope he's right. The stock has been bid up considerably this year but has since fallen over 20% from highs of $101/share. With a share price just under $80 the company seems like a potential strong buy, but even these discounted levels are coming from loftier highs. Amazon sports a P/E of over 90 and a trailing P/E of over 50. Even poster children for growth, Apple (AAPL) and Google (GOOG), sport ratios that are half of Amazon's.

If Kindle becomes even half of what iPod is, shareholders will have plenty to cheer about, but that is certainly a big IF. The Kindle sports some very nice features, looks small and sleek enough to justify a slight Cool factor. It's obvious Amazon techies spent a long time making sure the thing didn't look like it was beaten with an ugly stick while they shoved all sorts of hardware inside. The Kindle in essence is an electronic book reader, and any one with any sort of personal library could use one on the go for reading. So first let's take a look at the positives.

Amazon's got the content (in this case books) to support this venture, and in time I'm sure a vast majority of the Amazon library will be available for purchase for $9.99 or less. The device works with all sorts of formats but converts them to Amazon's proprietary reader format. The battery will last about 30 hours and a consumer will be able to automatically get subscribed newspapers and blogs sent to the device. That's right, the bright minds at Amazon decided to make this a wireless device that works on the cellular network for free through Amazon's covert WhisperNet. No word yet if WhisperNet is self-aware and may malfunction like its more famous cousin SkyNet. All jokes aside, the technology here is a big selling point. EVDO based cellular Internet will allow users to download books, newspapers and blogs that they have paid for, automatically and without a computer connection. So you're not killing your eyes staring at a screen the whole time the Kindle sports an e-ink screen that isn't back-lit to make reading easier. A definite plus there.

Now some negatives. It's pricey at $400 but compares relatively well to the Sony (SNE) E-Book Reader. Stylistics is a subjective game and rarely are devices or products uniformly praised for their elegance. So there's a fair chance that the public will think it is in fact a pointy, clunky ugly device, but I disagree. By no means is the thing gorgeous but it isn't bad, even if the slanted keyboard keys seem quite awkward. It's difficult to say at this point how the distribution and downloading of content will work but horror and wonder stories should trickle in as the device gets into the hands of the consumers. The real problem I see with the claim that the Kindle will be the "iPod for books" is the fact that one's personal library is as sacred as anything else in the household. The book-reading and book-owning population loves to fill shelves with books as it instills a sense of pride much more than a music collection does.

So the average song is somewhere between 3 and 4 minutes while the average book 300-400 pages. Reading a page a minute requires more than 5 hours of reading for the average book. Music is simply consumed and changed much faster than books. While carrying an entire CD collection during a trip makes little sense, carrying one book isn't all that bad. You can't exactly switch the Kindle to random and read pages from one book than another. Also, it's a well known fact that every iPod is not filled with music from the iTunes store. Majority of this music comes from CD collections that users had purchased throughout the years than ripped to the device for portable use. This process is simply not feasible with books, for obvious reasons, so to be able to take your favourites with you on the Kindle you'll have to buy them again digitally. Something I'm guessing most consumers will not want to do.

While I have serious doubts about the Kindle becoming some kind of iconic reading device, it is a very strong step in the right direction from a company that is also turning itself in that direction. While I think shares are overpriced today, a slide back towards $70 or under would make things very attractive considering there is upside to analysts estimates of $1.78/share in earnings for next year. Provided the economy in the United States stays relatively strong, and is not brought to its knees by the credit crisis and weakening dollar I would have no problem paying 35 times 2008 earnings, with upside to nearly $2/share, for Amazon and its future growth prospects.

To be as ubiquitous as the iPod, the Kindle has a long way to go but the youth of today are living in a digital age and the old adage of being able to hold on to, and feel what you buy is slowing fading away. Content will be king, content will be digital, and Amazon hopes that content will be on your Kindle.

Disclosure: Author currently does not own AMZN

15 November, 2007

Markets Slide Lower Thursday for 2nd Straight Day, NovaStar faces further Problems

Bearish sentiment gains strength for the 2nd straight day in the North American markets. The Dow closed down over 100 points, and is down about 250 points from highs seen earlier this week. The Nasdaq and The S&P indices followed the Dow's 1% loss with the similar percentage losses.

The selling was broad Thursday led by Energy and the Financials. Big US banks continued declining, with the major names dropping between 3 and 4%. The credit crisis reared its head again as NovaStart Financial (NFI) dropped its REIT (Investment Trust) status as it could not afford to pay out its required yearly dividend. The ramifications of this move are not clear yet as in prior reports the company was trying to shift its dividend from cash into preferred shares and try to drop its REIT status for next year. The problems in NovaStar are clear and Investors headed for the exits. The shares dropped over 50% and after hours fell below $2/share. Will the company have enough resources to continue operations while the market for its services is as fragile as it currently is? Investors seem to not have much hope. The company's share price was over $30 late last year, actually $120/share if you include the recent 1 for 4 reverse split. With a market cap of under $20 Million it'll be interesting to see if the company has any flexibility whatsoever to try and survive through trying times. Other risky loan players such as Country Wide Financial (CFC), down 8%, and Washington Mutual (WM), down 4% were also lower on renewed fears.

Starbucks (SBUX) was in focus after hours as it reported its quarter with a mixed bag of results. The premium coffee provider delivered earnings ($0.21/share) and revenue numbers ($2.45Billion) in-line with forecasts but the company lowered its new store openings plan for next year and remained cautious with its outlook. The stock was hit 7% after hours but is a great North American brand that is expanding furiously Internationally. The stock is down 45% from its 52-week high, and now it's worth a closer look after tonight's after market decline.

Disclosure: Author holds no position in the stocks mentioned

13 November, 2007

What a Difference a Day Makes, Markets rebound Tuesday

Four Days of heavy sell-offs for North American Markets were met with enthusiastic buying as earnings, financial executive appearances and economic data supported a more bullish tone. Technology led the rise with the Nasdaq gaining more than 3.5% while the Dow Jones and S&P followed with gains of 2.5-3%.

Earnings from Wal-Mart (WMT) pushed stocks higher at the open as the benchmark retailer said it was expected a solid Christmas shopping season. Investors applauded the earnings beat and forecast and sent shares up more than 6%.

In the financial sector, a day after E*Trade Financial (ETFC) plunged 59%, a somewhat rebuttal to the bankruptcy fears from another analyst sent E*Trade soaring back 40%. A swing trader's dream stock the last couple of days, but the risks with this company still remain. E*Trade has assured it is well capitalized to absorb loan write-down losses and that bankruptcy is not in its future. In other financial circles, Bank Of America (BAC) reported that it will write down $3Billion more in losses, while Goldman Sachs (GS) CEO Lloyd Blankfein spoke at a conference showing the street once gain how brilliant the business and trading side of Goldman is. The context of Blankfein's talk; Goldman will not be taking any more write-downs and is still shorting Sub-Prime sectors. I for one think that Goldman's earnings will once again be stellar and prove to Investors it is not only Best of Breed on the Street but seemingly in its own Pantheon of Investment Banking. Shares of GS rallied heavily today, up almost 9% coming back to $233/share.

Technology was a big winner, as the Nasdaq paced gains, with Apple (AAPL) up 10%, Baidu (BIDU) up 13%, VMWare (VMW) up 13%, Google (GOOG) up 5% and Research In Motion (RIMM) up 9% all regaining some lost ground. I said very recently (Link) that Technology would be back and investors should look for strong fundamentals to find winners during the panic-stricken sub-prime selling crisis. Now by no means does today mean that all that can be forgotten and momentum will continue but it does provide a foundation for bullish sentiment.

There are several economic measures coming, including two key metrics this week; Producer Price Index - (PPI), and Consumer Price Index - (CPI), Wednesday and Thursday respectively. Now although the housing indicator released today showed a slight percentage gain, compared to the estimated percentage loss, the outlook pointed to things indeed getting worse from here on out before they get better for the home building sector.

Disclosure: Author owns GS, BAC, AAPL, GOOG

12 November, 2007

Markets continue slide Monday, Technology leads selloff

The Dow Jones now stands at a 4% loss over the previous 5 sessions. The Nasdaq 7.5% lower and the S&P 4%. In Canada the TSX index slid 6% in total the past week and 2% during Monday's trading session. Technology was the main culprit for the sell-off. Investors were looking for safer havens as the financial sector was rattled again with more credit losses, and the economic outlook seemed to worsen for the United States.

Those hit hardest have been the best performers over the last couple of months, since market lows in mid August. Technology stocks were on a roll for over 2 months as the latest round of earnings for the September quarter provided buying catalysts. Many of these names have come crashing down over the span of a week and a half as the markets have turned negative and traders locked it profits. Just a sampling of the fallen momentum players that were so successful in the run from August lows to October highs.

All Percentages are based on recent highs in these stocks.
Apple (AAPL): Down 20%
Google (GOOG): Down 15%
Baidu (BIDU): Down 30%
Amazon (AMZN): Down 24%
Las Vegas Sands (LVS): Down 23%
Wynn Resorts (WYNN): Down 27%
Research In Motion (RIMM): Down 25%
China Petroleum (SNP): Down 30%

All these names had tremendous runs over a 1 year time frame, many more than doubling in value and as market lore teaches every trader, it's not a profit unless its on the books. Now some Financial names have fallen much further than the above mentioned stocks but they weren't the ones leading the Tech and Growth charge into October. Money and the markets are cyclical in nature and money will return to Technology, but the market outlook these days is very hazy as talks of economic fears and recessions fill trading floors. Traders and Investors alike must be cautious here as the Credit Crisis spills over further than most expected. In times like these valuations and fundamentals play a bigger role in selecting winners for the next 6 month-1 year time frame.

Disclosure: Author is long AAPL, GOOG

E*Trade Sinks on Liquidity worries, Risks continue to mount

Investors fled from E*Trade Financial (ETFC) this morning as rising worries or more loan loss write downs and the possibility of a liquidity crisis hit the stock. Shares fell over 50% in the early market hours on the heels of an analyst report that brought up the possibility of Bankruptcy.

No, this analyst didn't get Wheel Of Fortune re-runs mixed up with E*Trade, there are legitimate concerns here. The Citigroup analyst made the point that the possibility of bankruptcy is only 15-20% right now, but that can certainly rise if things get worse in the loan department. E*Trade's core business is their discount brokerage and if that starts to go it's lights out for the company.

Management is trying hard to reassure the Street that the company is well capitalized and can afford to take an immediate $1Billion hit. While that may be so the lingering thunder-cloud here is that E*Trade's own brokerage customer may flee and demand their cash. If this happens in droves, E*Trade is in real trouble. If things do get so bad that E*Trade will have to go into bankruptcy protection the masses of angry customers and lawsuits will keep the company tied up for years and years and make E*Trade "Uninvestable".

The sheer drop today makes for some potential day trades off of lows but until things get better -and all signs point to things getting worse first- E*Trade has to be ignored as a stock to own. There are no catalysts here for the company right now except for the general North American economy and more potential reassurances. Traders didn't seem to buy today's reassurances so future press releases from Management will have to be much more convincing of a recovery to business as usual.

Disclosure: Author holds no position in ETFC

07 November, 2007

Fear over Financials drags Markets lower Wednesday

North American markets were broadly lower Wednesday as investor fear in the Financials and further credit crisis write-downs caused massive selling. Major indices across America were off between 2 and 3%, with the biggest loser being the S&P 500.

The US Dollar continued to weaken against other major currencies setting a new record low against the Euro. For us Canucks (Canadians, for those not from North of the border), we saw our Loonie hit $1.10 before settling back to $1.07 and change. Great if you're planning a loot shopping session in Buffalo on the weekend, not so nice if you're holding American investments.

The Financials were the biggest victims, whether they deserved it or not. Fear of further write-downs and losses spurred selling that carried throughout the entire day.

The list of victims is as follows:
Citigroup (C) - Down 4.5%
Bank Of America (BAC) - Down 5%
Wachovia (WB) - Down 6.5%
JP Morgan (JPM) - Down 4.25%
Morgan Stanley (MS) - Down 6%
Goldman Sachs (GS) - Down 4%
Lehman Brothers (LEH) - Down 5.75%
Novastar Financial (NFI) - Down 2.75%
Washington Mutual (WM) - Down 17.25%
Countrywide Financial (CFC) - Down 9.25%

Not even high flying Technology could save this session as selling was seen across the board. The amount of trader fear that exists over further credit losses, makes this a scary time as yet to go bargain hunting. If trying to buy on the cheap, do it in blocks and stagger the purchases because this pent up fear carries with it more potential downside.

Cisco Systems (CSCO) reported after the bell, a strong profit quarter, in line with forecasts but their guidance and words sparked further after hours selling. The US Bank debacle has starting to creep into the technology sector according to Cisco, as orders for networking equipment from the Financials were much weaker and comments form Cisco management only stroked further fears. Shares were off 4% in trading and another 9% in after-hours trading, leading major tech futures lower going into tomorrow's trading session.

Disclosure: Author owns and has covered calls in C, BAC, WB, GS

05 November, 2007

Google Opens Up about Mobile Strategy, new Platform called Android shows Promise

Reports trickled in over the weekend that Monday was to be the day that the long awaited "gPhone" announcement would come in some form. Google (GOOG) complied with those rumors and held a conference call announcing an Open Mobile Platform rooted in a Linux based Operating System.

This system, dubbed Android, was announced by Google and several of its partners in the Open Handset Alliance, including Qualcomm, T-Mobile, HTC, Sprint and Motorola. Over 30 partners in all for the Internet search giant, all committed to produce the technology to make a powerful, open Operating System for cell phones a reality. Google will provide the backbone programming for the Linux-based OS and will release an SDK (Software Development Kit) so that developers of all shapes and sizes will be able to create applications for a multitude of devices.

The first of these devices are expected to be available in the 2nd half of next year touting as its main feature a complete full scale Web Browser, much like Apple's Safari on the iPhone or the Opera Mini browser available for certain other smart-phones. Thus far details are scarce and not well known about Android, but next week's sneak peak at the SDK should give several more clues. This open initiative by Google comes right after the announcement of OpenSocial, an open development platform for Social Network sites, with which Google has signed up several partners including MySpace, LinkedIn, Salesforce.com and its own Orkut network.

The power of the mobile Internet is something Google has its sights squarely on, and the advertising platform that that could bring. The world has billions of cell phone users and over a billion handsets are sold each year, which represents a fantastic opportunity for localized and personalized advertising. It just so happens that Google has become a virtual expert at both of those flavors of ad-serving. Analysts and economists are throwing around estimates for growth in the mobile ad space and their particular 'Billions of $$$ by Year X' don't matter just yet, what does, is the resounding emphasis that it is the next great Internet growth sector.

The Android platform will provide Google a foundation to port its Internet software on a multitude of devices, and as CEO Eric Schmidt pointed out during the call:

"This is not an announcement for gPhone, we hope to see thousands of gPhones"

The thinking by Google of course, is that, why make the hardware when so many others already do. Create a platform that will excite partners, can cater to everyone's needs, and everyone succeeds. Google doesn't make the computers that sit at your desk do they? No! But they provide an expansive software platform and a multitude of services that arguably are simpler and better than competitive services. With powerful enough phone hardware and screens that can somewhat do justice to the "Complete Internet" Google can follow the same model with cell phones that they have used to dominate in the Internet space for Personal Computers. Not to mention innovation can foster truly and freely on an open software platform, which Android is touted as being. Google's planning to be there every step of the way and innovate as quickly as they can in this space.

Google shares have risen tremendously since August lows around $500/share, hitting a new all time high of $730 today, closing at $725. The hype built around a mobile push by Google stemmed some profit taking but the potential of this being a major platform and a revamp in mobile industry thinking is too hard to pass up for Investors. The sentiment that phone carriers lock in consumers and halt innovation, both on the hardware and software side, can die a quick and painful death if an open software platform for mobile devices in embraced. Google knows this as do its partners, and most importantly customers are starting to take notice as well.

The mobile space, especially for advertising is still wide open and Google is trying to out innovate its major competitors Yahoo (YHOO) and Microsoft (MSFT). Both companies of course missing from Google's partner list on this project. The simple fact in the mobile industry is that cell phones are turning more and more into little powerful computers capable of doing much more than phone calls and this is no different with the Internet. Consumers will see Internet on their phones much more prominently over the coming months/years and the expectation will be for a complete and encompassing experience.

The quicker that experience becomes reality the quicker Google will be able to grow into a mobile advertising conglomerate. Today's technology consumer is much more mobile than in years past and the thinking is, and I completely agree, that these mobile users will have many more opportunities to use Google products such and Search, Gmail and Maps on the go. With more usage, comes more advertising placement opportunities when it will really matter. Getting advertisements for local restaurants when you're at home is one thing but getting localized and personalized ads for local restaurants when you're hungry and on the town is something completely different. And for this to work well, Android must become the platform of choice.

Disclosure: Author is long GOOG

04 November, 2007

Changes at the Top for Citigroup, CEO Prince steps down

Citigroup (C) Chairman and CEO Charles Prince has resigned. A move that shareholders were seemingly asking for, for more than a year, finally happened, and all it took was a disastrous housing and credit situations that nearly crippled the momentum of the United States economy.

Citigroup stock was recently beaten down heavily as the company was downgraded by analysts who were citing more write-downs due to mortgage loses and the fear that the company may need to cut its dividend in order to conserve its cash reserves. Citigroup had written down $6.5Billion worth of mortgage based investment losses. That's plenty of money to just vanish, but the kicker is that it's seemingly not gonna get better any time soon. The announcement of Prince stepping down was followed by further words of mortgage losses totalling up to $11Billion.

The company tried to reassure investors by claiming that it has no plans to cut its dividend but it'll be wait and see if that in fact is reality. Citi stock peaked earlier this summer and has fallen over 30% from that high. In the midst of these hefty losses and write-downs it was time for a change. The Chairman spot will be taken by Robert Rubin and the CEO title will be held in the interim by Sir Win Bischoff. What's next for the now struggling bank and its stock? Does anyone really know? A company having to make changes at the executive level is usually a company dealing with some kind of turmoil. However, a bank as big as Citigroup, with a reach across 100 countries has to be expected to recover in the coming years.

Holders have taken the hit now, but if the dividend in fact stays where it is, than the powerful yield of over 5% is very attractive at these stock levels. I thought Citigroup would find its floor around the $35 level but we'll have to see how traders react to Prince departure. Had this happened in the months before the credit crisis the response would have been overwhelmingly positive but with the heavy losses lingering on the minds of shareholders I expect he response to be more muted. Citigroup has a ways to go to get back near its highs, and while there are much better banks out there, with less exposure to credit problems, its a company that is so widely held that at levels under $40 it should be owned.

Disclosure: Author is long C

01 November, 2007

Las Vegas Sands posts loss as Gamblers Win and Sink the Casino Growth Sector

The Casino growth story popped severely today. The two poster child's for Macau gambling growth were sold off in bunches. Las Vegas Sands (LVS) posted a LOSS! That's right a LOSS even though its been growing its operations tremendously worldwide. Now some costs of opening new resorts factored into the loss but the bottom line was that the House was beaten this quarter. Gamblers seemed to have their day, not only at the expense of the casinos but their stockholders as well. After hours results from LVS caused shares to drop 15% after an almost 6% decline during the regular trading session. Fellow casino growth brother in arms Wynn Resorts (WYNN) posted a 4% decline in the regular session and was off 8% in after hours trading.

My take on the casino players has always been, through two major articles now, that MGM Mirage (MGM) has the potential to be the most steady and risk averse of the big 3.
From establishing highs recently the high flying momentum casino stocks WYNN and LVS have now accumulated losses of 20% and 30% respectively. Both stocks have more than doubled in the span of the last year so Investors surely must still be satisfied. Now MGM, which also more than double over the past year has only fallen 12% from its high of $100/share. On a foreword P/E basis it is also still the cheapest of the 3 casino players.

Thus MGM is still my Lion in this space and I will be buying if I see the low 80s. I do however think both WYNN and LVS are becoming a lot more attractive on a valuation and potential growth basis after this latest round of quarterly earnings fumbles, but the plan that MGM has is still unfolding in Macau and worldwide and that's the one I want to own.

Disclosure: Author currently holds no position in any of the companies mentioned

Aftermath of Fed Cut creates Market sell-off led by Financials, Citigroup Pressured

The Federal Reserve statements after their Halloween rate cut of 25 basis points, based on further economic instability due to housing issues, signaled that inflation is at the forefront of The Organization's list of concerns. This talk spooked investors Thursday and led to the Dow dropping by over 360 points. The Nasdaq and the S&P followed suit, both dropping over 2% and the Canadian TSX index fell 1.7%.

Worries over inflation signalled to Traders that the Federal Reserve will be much more cautious about further rate cuts; or as Traders read it, No December cut. This put a damper on the extended Fall rally that seemed to continue yesterday after the Fed's decision to in fact cut rates again.

The market was hurt today primarily by uncertainty in the Financial sector and Citigroup (C) was hit the hardest. Downgrades to Citigroup and Bank Of America (BAC) prompted selling in most financial securities. Looking across the Banking and Investment Banking board was not a pretty site at the close of trading as the entire sector was down by almost an average of 4%. Comments made about Citigroup focused on their ability to stabilize their balance sheet amongst the credit turmoil. This led to fears of a cut in the dividend and sellers were immediately very active. What's the point of owning a steady bank if it needs to cut its dividend just to maintain steady?

While the credit crisis poses serious issues and strains on the financial community of stocks, it is an atmosphere that seems to be closer to the bottom than not. With Citigroup falling below $40/share and probably on its way to $35, the buying support should establish itself in the months ahead. The dividend cut rumors may or may not be true but these banks will continue to operate and in the coming years this credit crisis bottom may be one of the best financial stock opportunities, to bottom feed, that has come around in quite some time.

Google (GOOG) broke a milestone yesterday as it crossed the $700/share mark, and today with all the selling still managed to hold onto a closing price of $703. But not before setting an intra-day all time high of $713. Techs are still in season right now for investors and its worthy to note that once again the Nasdaq was the smallest loser of the day amongst the major US indices.