Finally, a Bull Week for Wall Street |
It was a week that ended with some gains. The Fed pledged another $800 billion for credit markets, in an effort to boost consumer leading. The news caused a drop in mortgage rates from 6.06% to 5.77, the largest drop since early September, when the administration announced it was taking control of Freddie and Fanny. Gasoline prices also continue their decline, down for the 70th straight day to the lowest level since Jan 2005 according to motorist group AAA. On the negative side, new home sales declined 5.3% and durable good sales tumbled by 6.2%, its biggest spill in two years. And jobless numbers continued at recession levels.
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We looked at the upcoming holiday season this week as we choose the companies that would be reviewed. Advertising in general has been getting hurt this year as it’s the first thing to get slashed when companies lose money. However, online advertising offers a much clearer return on company investment than any other form of advertising. This is something that is becoming more evident as advertisers look at ways to save money. Our Bearish pick is a big-ticket item manufacturer that is facing increasing difficulty from both a consumer confidence problem and a credit crunch atmosphere that makes it more likely to fall in the short term. |
Bullish:
Google (GOOG): Google is a growth juggernaut that should be bought at its current price of $288. With consumers spending less time in stores and more online looking for discounts, Google stands to benefit. |
Bearish:
Toyota (TM): The big three American auto makers have captured most of the headlines the past weeks, but the truth is that most of the major automakers are going to need help to get through what looks to be the biggest slow down in auto retail in the last 20 years. Although we do believe that Toyota is a long term buy, its going to fall below $50 before it starts recovering. |
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