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Analyst Upgrades/Downgrades

Fitch Warns of US Downgrade Over Debt Fight


“Failure to raise the debt ceiling within a “timely” manner would see the United States’ sovereign ratings put under formal review with “highly uncertain” consequences, rating agency Fitch warned U.S. policymakers Tuesday.

In a statement Fitch said the debt ceiling was “an ineffective and potentially dangerous mechanism for enforcing fiscal discipline. It does not prevent tax and spending decisions that will incur debt issuance in excess of the ceiling while the sanction of not raising the ceiling risks a sovereign default and renders such a threat incredible.”

Read more:( US Default Should Be ‘Unthinkable’: Larry Summers)

Fitch warned that while the current Negative Outlook on the triple-A rating would likely be resolved, the absence of a credible medium term deficit reduction plan meant a downgrade later this year is likely “even if another debt ceiling crisis is averted.”

It added that the U.S.’s triple-A rating was “underpinned by the country’s relative economic dynamism and potential, diminishing financial sector risks, respect for the rule of law and property rights, as well as the exceptional financing flexibility that accrues from the global benchmark status of U.S. Treasury securities and the dollar” – all of which was now threatened by the looming debt ceiling…”

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$GS Expects Big Upside in the Euro

“For the past few months, Goldman Sachs has had a problematic trade on its hands.

On October 22, 2012, the bank’s currency strategists recommended clients go long the euro against the Canadian dollar. The trade was initiated at a level of 1.296 with a target of 1.37. (At the time, Goldman saw more upside to the euro in Canadian than in U.S. dollar terms, owing to a projected shift in Bank of Canada monetary policy).

The trade has gone nowhere. It reached its highest point on December 28 – but by then had only risen to around 1.3170. After that, it tanked into the new year and has languished in recent days.

That is to say, the trade languished up until yesterday, when ECB President Mario Draghi revealed that the central bank’s latest decision not to cut interest rates was unanimous on the Governing Council.



Bloomberg, Business Insider


Since then, the euro has staged a sizable rally.

Today, Goldman Sachs FX strategist Robin Brooks says in a note to clients that it should go much higher. However, Brooks’ reasoning still has more to do with what Draghi said in July – that the ECB would “do whatever it takes to save the euro” – than what he said yesterday.

Since the introduction of the ECB’s OMT bond market intervention later this summer, government borrowing costs have dropped precipitously in the periphery. Nowhere is this more apparent than in Italy, where the spread between Italian 10-year sovereign bonds and German bunds fell below 250 basis points today for the first time since before the euro crisis exploded.

However, recently the euro crisis conversation has turned to fundamental economic growth and eurozone member states’ inability to meet economic targets. Today, the rate of contraction in Spanish industrial production unexpectedly accelerated to a staggering 7.2 percent, well below the 3.1 percent decline in the previous month and economists’ expectations of a 1.5 percent contraction.

Hence, a new debate: what’s really driving the euro? ..”

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$GS Out With a List of Dividend Payers and Buyback Plans

In a recent Portfolio Manager Action Alert note, Goldman Sachs’ Robert Boroujerdi makes his case for income stocks.


He calls his specific strategy the “social contract” i.e. companies that should offer returns of at least 5 percent in 2013 through dividends and accretive buybacks.

Boroujerdi like these stocks because companies have the capacity to pay, investors demand them, and they look more attractive than bonds.

Goldman identified 23 buy-rated stocks from various sectors.

NOTE: Earnings per share accretion occurs because buybacks lower share counts and therefore boost EPS. All EPS accretion due to share share count change represents a 2013 estimate.

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$JPM’s Chan: US Economy Is ‘Starting to See the Stars Align’

“The American economy is not likely to witness a miraculous turnaround, but many financial experts are expecting an improvement in 2013.

Many Americans will continue to face challenges, such as rising costs of living, wages that fail to keep pace and stubbornly high unemployment rates.

The new norm will be the same as the old norm for most households, according to The Des Moines Register……”

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$BA Tanking Again As Dreamliner Fire Draws Downgrades

Bloomberg is reporting this morning another eye-opening incident with one of Boeing‘s (BA) 787 Dreamliner planes:

Flames about two feet (0.6 meter) high shot out of an avionics bay in the jet’s belly yesterday as the plane sat at a Logan International Airport gate before its next departure, and there was a small explosion, Massachusetts Port Authority Fire Chief Robert Donahue said in an interview. Japan Airlines, which has seven 787s, won’t ground other Dreamliners.

Thankfully no one was hurt, but after last month’s groundings this is yet one more black eye for Boeing’s Dreamliner.

I’ve noted before that Boeing deserves some forbearance for the 787′s teething troubles because it’s essentially trying to reinvent the modern passenger aircraft while running a profitable business,  but at some point the problems have to stop. And when you get fires breaking out on commercial planes, maybe we’re getting to that point.

Certainly that’s the view of Carter Leake, analyst at BB&T, who wrote this morning…”

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Apple Stock Price Forecast to Collapse to $50 Target By 2016

Got gutz…..then type 5 it…

“It is official Apple is one weak stock right now. It is supposed to be a tell when the market is up, and your down considerably to the tune of 3%. The Jim Cramer tax selling notion can now be dispelled as well. This is the new year, and for Apple shareholders the misery of the third quarter is repeating itself.

After a bump up with the entire market at the beginning of the year, a 300 point rally can lift a lot of boats; the sellers loved that entry point to reassert this stock on the downtrend it has been on since the 700 dollar level.

So what is really going on in Apple? What are the reasons for this Wall Street darling losing favor to such a degree? Where is this stock ultimately heading in regards to a price target? These are some of the things that I am seeing with the fundamentals of the Apple business model.

Apple doesn`t make the best phone anymore

Apple doesn`t unquestionably make the best smartphone anymore. The Galaxy3 by Samsung is at worst case on equal footing with regard to the Apple I-Phone 5 smartphone, and depending upon what features you covet in a smartphone, the Galaxy3 is even better for watching Netflix movies or playing games with its much bigger screen.

Timing really hurt Apple because the Galaxy3 came out 8 weeks earlier, and all those subscribers who could have looked at the I-Phone 5, went into their local Verizon or AT&T store and fell in love with the beautiful Samsung Galaxy3.

The Galaxy3 made all other phones, including all the latest offerings from the other brands look old and antiquated. It really stood out aesthetically by comparison. Yes it had the Apple ahh factor!

And once those subscribers bought the high end phone, they are locked up for at least 2 years with their new contract, and Samsung sold a lot of Galaxy3 smartphones, in fact they had a blowout quarter.

Rate of change …”

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Forrester Report Says Apple Will Sell $39 Billion In Macs and iPads To Businesses Over Next 2 Years

“Forrester Research is reporting that Apple will sell $39 billion in Macs and iPads through 2014.

According to the firm’s latest report, Apple will sell $7 billion worth of Macs and $11 billion in iPads to the corporate market this year. In 2014, Apple will sell $8 billion in Macs and $13 billion in iPads.

Forrester Analyst Andrew Bartels said to me in an email interview that Apple is having success in the corporate market for three reasons:

  1. Good products that employees want to use, and feel proud when their firm provides them.
  2. Best-in-class tablets in the iPad, which firms turn to first for tablets.
  3. A corporate sales organization that has been responsive to business demand and delivers competitive prices….”

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Gartner: Global IT Spend To Hit $3.7T In 2013, Up 4.2%

“Analyst Gartner has increased its forecast for worldwide IT spending in 2013, revising its Q3 2012 figure up from 3.8 per cent growth to 4.2 per cent higher than last year’s figure. The analyst is now forecasting that worldwide IT spending will hit $3.7 trillion in 2013. Much of this spending increase is down to projected gains in the value of foreign currencies versus the dollar, said Gartner, noting that when measured in “constant dollars”, 2013 spending growth is predicted to be 3.9 per cent.

“Uncertainties surrounding prospects for an upturn in global economic growth are the major retardants to IT growth,” said Richard Gordon, managing vice president at Gartner, in a statement. “This uncertainty has caused the pessimistic business and consumer sentiment throughout the world. However, much of this uncertainty is nearing resolution, and as it does, we look for accelerated spending growth in 2013 compared to 2012.”

Gartner’s forecast for worldwide devices spending — which includes PCs, tablets, mobile phones and printers — is expected to reach $666 billion in 2013, up 6.3 per cent from 2012. Despite this rise, the forecast is a “significant reduction” on Gartner’s previous 2013 outlook forecast of $706 billion in worldwide devices and 7.9 per cent growth. The analyst noted that its long-term forecast for worldwide spending on devices has been reduced as well, with “growth from 2012 through 2016 now expected to average 4.5 per cent annually in current U.S. dollars (down from 6.4 per cent) and 5.1 per cent annually in constant dollars (down from 7.4 per cent)”…”

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Ratings Agencies Will Look the Other Way As U.S. Buys Time

“The United States may have bought some time in avoiding another credit downgrade with the fiscal cliff deal, but the major ratings agencies are keeping a close watch on what happens next in government debt talks.

The big credit agencies will probably not pass judgment until they get more visibility on the U.S. debt ceiling and longer-term plans to reduce borrowing, CNNMoney predicted.

Standard & Poor’s late last month repeated a warning that the U.S. could face another downgrade by 2014 — or sooner — if Congress does not find a solution for reducing the national debt….”

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S&P Cuts $CAG Debt Rating to Triple B-

“Ratings agency Standard & Poor’s has cut its ratings on debt for ConAgra Foods Inc. (NYSE: CAG) from BBB to BBB- following the company’s announcement that it would finance its $6.8 billion acquisition of Ralcorp Holdings Inc. (NYSE: RAH) primarily with debt. S&P’s outlook for ConAgra is listed as “stable.” ”

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$MS’s Top 10 for 2013

“Morgan Stanley’s global cross-asset strategy team, led by Greg Peters, is out with its Top 10 Asset Allocation Trades for 2013.

The trades sum up investment bank’s macro views and are fairly straightforward: all of the trades consist of stocks, bonds, and currencies.

One interesting aspect of the team’s recommendations: they are mostly skewed away from investing in U.S. assets, as Morgan Stanley sees other areas they think represent bigger opportunities.

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