MOST NOTEWORTHY: American International Group, Pacific Sunwear, FedEx and Cheniere Energy were today's noteworthy downgrades:
Goldman downgraded American International Group (NYSE: AIG) to Neutral from Buy as they expect market concerns regarding balance sheet pressures and dilutive capital raises to pressure shares.
Citigroup downgraded shares of Pacific Sunwear (NASDAQ: PSUN) to Sell from Buy as they believe Q1 trends are disappointing following the comp results.
Morgan Keegan downgraded FedEx (NYSE: FDX) to Market Perform from Outperform citing the uncertainty related to fuel prices and the economy. RBC
Capital cut Cheniere Energy (NYSE: LNG) to Underperform from Outperform citing the corrected 2007 10K which indicates increased liquidity concerns.
OTHER DOWNGRADES:
Oppenheimer cut Navios Maritime (NYSE: NM) to Perform from Outperform.
Credit Suisse lowered TAL International Group (NYSE: TAL) to Neutral from Outperform.
Vital Signs (NASDAQ: VITL) was downgraded at Piper to Neutral from Buy.
TheStreet.com's Jim Cramer says FedEx exposed three market fictions with its news on Friday.
Sometimes you have to wonder why some stocks just don't stay down after bad news.
Take FedEx (NYSE: FDX) (Cramer's Take). Earlier this year, the stock shed about 10% of its value when it forecast worse-than-expected earnings, citing lower volumes and higher fuel costs. It then proceeded to rally 25% from that dismal forecast even as oil went up dramatically and business in the U.S., particularly retail business, got softer and softer!
Now we get pretty much a simple extension of what the company said last near the end of March, and people are acting surprised and furiously dumping the stock.
FedEx cuts to a couple abiding fictions in this market. The first is that all valuations are cheap, so it is OK to buy them. FedEx has long-term growth of 10% and sells at 14 times earnings, but I question both the growth and the multiple as being too high in a world where energy just won't quit. But that brings us to the second fiction: People have been buying this stock with the idea that oil just has to level off somewhere. Considering it didn't, how could anyone be surprised at this news? And the third fiction? The turn in the economy is right around the corner.
Stock futures were higher early Monday morning as the dollar strengthened and oil prices retreated. Investors may be coming into the market looking for bargains as a result of the recent selloff, meanwhile digesting news of a profit warning from FedEx, upbeat outlook from HSBC and Cableivision may be close to buying Newsday.
On Friday, stocks tanked after oil kept setting new highs, passing the $126 per barrel level. Losses from American International Group -- a Dow component -- also contributed to the bearish sentiment as many had hoped financials were on their way to a recovery. The Dow industrials lost 120 points, or 0.94%, the Nasdaq Composite declined 5 points, or 0.23%, and the S&P 500 declined 9 points, or 0.67%.
Without much economic news, investors will focus on the dollar and oil prices. After breaking the $126 per barrel level Friday and settling at $125.96, oil prices retreated Monday in Asia as the dollar strengthened against the euro and yen. Of course, the retreat is relative and oil has been trading around $125.34 recently. And for the first time since December 2005, futures traders are turning bullish on the dollar, according to Bloomberg. According to two measures of currency trading, it seems traders expect further dollar appreciation, and not only that, that the rally will hold.
FedEx Corporation (NYSE-FDX) lowered Q4 EPS guidance to $1.45-$1.50 verses consensus of $1.69:
FDX was recently trading at $87.59 in after market trading, below a close of $90.37. FDX call option volume of 2,872 contracts compared to put volume of 8,038 contracts. FDX May 90 straddle went out at $3.30. FDX June option implied volatility of 34 was above its 26-week avearge of 31 according to Track Data, suggesting larger risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Despite a lower "trade deficit" number, investors have been taking profits. Seeing oil go over $126.00 hurt more than a horrible turnout in financials. Below are the unofficial closing levels:
American International Group, Inc. (NYSE: AIG) fell over 8% to $40.26 after reporting huge losses and disclosing that would raise $12.5 Billion in capital.
This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
When you need to ship a package, which company first comes to mind? According to last year's Battle of the Brands non-scientific poll, an overwhelming majority said they favored United Parcel Service Inc. (NYSE: UPS) over FedEx Corp. (NYSE: FDX). Higher fuel surcharges, a weak economy, reduced domestic package volume, and a recent push from the U.S. Postal Service have impacted both of these international shipping companies in the past year, but Americans still want the same quality service at a discount price.
Let's take a look at a few changes since last year:
The US Postal Service Tries To Gain Ground
The largest player in the U.S. overnight package delivery business is attempting to increase its market share in the fast-delivery business next month. USPS is barely holding on to its 32% market share in the business, as FedEx and UPS continue to push the envelope at 31% and 25% market share, respectively. For the first time, shippers using Express Mail, Priority Mail, and several other parcel services will be able to get lower rates for large- and medium-volume contracts, according to the agency. Will UPS and FedEx need to cut their prices further to compete with the USPS?
Fred Smith, founder and CEO-for-life of FedEx Corp. (NYSE: FDX), says that the economy is not so healthy. He should know. His company does business in almost any town of any size in almost every country in the world. So, he may have come to his point of view a little late since many experts believe that the economy has been in a recession for at least two months.
According to Reuters, Smith said "The only positive story in the U.S. economy right now is U.S. exports." He also indicated he believes there is a chance things could get better in the second half.
Smith is a good example of the inclination of many U.S. CEOs to soft pedal the fact that the economy is awful. It's as if they hope that not talking about the problem, or saying things are a little better than they seem, will make their troubles go away. It is a "head in the sand" approach that doesn't do companies and their shareholders any good because it means that management is not doing the necessary work to prepare for a tough ride.
But, a CEO who can't be pushed out has that luxury.
Douglas A. McIntyre is an editor at 247wallst.com.
Dynamex (NASDAQ: DDMX) provides delivery and logistics services in the United States and Canada. The firm focuses on intracity services involving both scheduled and on-demand delivery of time-sensitive items such as medical supplies, financial documents, electronics and office products. It uses third-party air and ground carriers to provide same-day intercity services. Dynamex also manages clients' vehicle fleets, mailrooms and inventory-tracking call centers. The company operates from some 50 North American facilities. FedEx Corporation (NYSE: FDX) is a major competitor.
Dynamex pleased investors last month, when it reported fiscal Q2 EPS of 33 cents. That topped the analyst consensus view by a penny. Revenues increased 10.9% (yr/yr) to $112 million. Management also guided FY08 EPS to $1.45-$1.55 ($1.54 Street estimate) and FY08 revenues to $455.18-$463.46 million ($445.48M Street estimate).
Shares of package delivery company FedEx Corp. (NYSE: FDX) have been dropping this morning, despite the firm posting better-than-expected third-quarter earnings per share. Hurting the stock this morning is the company's fourth-quarter guidance, which came in well below analysts' predictions.
FedEx reported this morning that its profit during the third-quarter slipped 6% to $393 million, or $1.26 a share, hurt by surging crude oil prices and a weak U.S. economy. These numbers are down from $420 million, or $1.35 a share reported in the same period a year ago when the company benefited from a reduction in its effective tax rate. However, the overnight package delivery giant was able to beat analysts' predictions for quarterly earnings of $1.22 a share.
The company posted a 10% rise in its third-quarter revenue to $9.44 billion, up from $8.59 billion a year earlier. Analysts, on average, expected FedEx show revenue of $9.11 billion in the quarter, according to Thomson Financial.
Are Money-Market Funds as Good as Cash? In stressful times, you may hear advisers and strategists recommend that investors raise their allocations to "cash." There are two reasons for doing so. First, cash, which is presumably risk free, protects your portfolio from losses. Second, raising cash builds reserves you can use to buy stocks, junk bonds or other assets at lower prices once the backdrop brightens. But just what is cash? And is it as safe as it appears to be? Are Money-Market Funds as Good as Cash? - Kiplinger.com
America's Cleanest Cities These 10 metro areas reap the economic benefits of clean water and pure air. Topping the list is Miami, Fl with healthy ozone levels, low pollution and high-quality water. Seattle, Jacksonville and Orlando also all rank highly. America's Cleanest Cities - Forbes.com
A day after stocks experienced a huge rally, they experienced a huge selloff and today, it seems, that the markets may start on a positive note, recovering somewhat from Wednesday's drop with buyers coming back in. U.S. stock futures are mildly higher after Nike reported surprising strong earnings Wednesday after the close, with sales boosted by the the weak dollar. Meanwhile, the dollar strengthened while commodity prices mostly declining.
After the Dow industrials rallied over 420 points Tuesday when the Federal Reserve cut rate by 75 basis points, it nearly gave it all back Wednesday when it dropped 293 points or 2.36%. As oil and gold prices declined seeing the worst one-day dollar decline in 17 years and 28 years respectively, oil producers and miners were lower, dragging down markets. The S&P 500 fell 32 points, or 2.43%, and the Nasdaq composite closed down 58 points, or 2.53%.
Few economic indicators are due out today: At 8:30 a.m., weekly initial jobless claims will be reported to give an indication of the labor markets. At 10:00 a.m., February leading indicator and March Philadelphia Fed index will be released. Both are expected to decline, showing an overall economic slowdown as well as a specific regional one (manufacturing activity in the Philadelphia area).
I have a bitter-sweet relationship with Adobe Systems Incorporated (Nasdaq: ADBE). I think they build great technology. In fact, I've been a customer of their Dreamweaver product since 2000. It's an awesome offering -- and gets better and better.
Yet, when it comes to Adobe's upgrade policies, they often fall short -- at least for me. For example today they wanted to charge me full price for a product that I've bought and upgraded several times over the years.
Oh, well. End of my rant.
The fact remains that Adobe continues to innovate. Interestingly, the company has recently announced a variety of initiatives. For example, Adobe is sponsoring the SQLite database open source project (according to the company's open source thought-leader, Dave McAllister). The company also has new open source destination.
With airline traffic steadily increasing, more and more of us are faced with the same question; How in the world am I going to fit all these things in our luggage? Maybe it is time to start thinking outside of the box, and instead of packing all our things, maybe we should just start to consider sending our belongs ahead of time and stop worrying about packing all of our things?
As I read Joe Brancatelli's (portfolio.com) article discussing airline baggage, I could not help think back to December when my girlfriend had her bags lost for over a week on a trip from Europe back to the states for Christmas. Inside this luggage we had all her clothes, as well as all of my family's Christmas presents. Since she was flying into the states on Christmas Eve, and the airline lost her bags for a week, we had no presents to give out on Christmas, and by the time they showed up, on New Years Eve, the Christmas magic was pretty much lost.
As we examined last week, airline delays last year were near an all time high, but as I mentioned in my article, the one thing that bothers me more than being late, is arriving without my luggage. While lost baggage rates stayed pretty steady last year, with 9 out of 1,000 passengers filing lost baggage claims, there are other reasons why we may should consider shipping instead of packing in the future.
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MOST NOTEWORTHY: American International Group, Pacific Sunwear, FedEx and Cheniere Energy were today's noteworthy downgrades:
Stock futures were higher early Monday morning as the dollar strengthened and oil prices retreated. Investors may be coming into the market looking for bargains as a result of the recent selloff, meanwhile digesting news of a profit warning from FedEx, upbeat outlook from HSBC and Cableivision may be close to buying Newsday.
FedEx Corporation
This post is part of our 
Shares of package delivery company 
I have a bitter-sweet relationship with 
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Oil hits record $127.43 on supply concerns, raised Goldman forecast
