What China’s Slowing Growth Means for You

It’s hard to be disappointed with JP Morgan’s
JPM) $1.09 a share earnings for the second
quarter. After all, analysts were looking for just $0.74 a share. But still,
JP Morgan’s 47% earnings beat isn’t being called a “blowout.”

If this has you scratching your head a little, don’t worry,
I suspect you’re not alone.

One of the big reasons that JP Morgan beat earnings
expectations so handily is that it had to set aside less loss reserves for bad
loans. That’s a good indication that the company is working its way out of the
problems created by the housing bubble

What Intel’s Earnings Mean for You

Intel’s blowout earnings report last night is certainly
making it look as though earnings estimates were revised too low for
corporations. And so the overwhelmingly pessimism that drove stocks lower
since early May seems to be shifting to optimism that maybe things aren’t
that bad after all.

Intel’s second quarter EPS were $0.51 on revenue of $10.8
billion. Those numbers crushed the analyst expectations. Analysts wanted
$0.43 with $10.3 billion in sales. Guidance was also way above expectations.
Intel’s management expects third quarter revenue of $11.6 billion from $11

CEO Paul Otellini made sure to let analyst know during the
conference call that this quarter was the best quarter in the company’s 42 year
corporate history.

Is China an Afterthought?

Could slowing growth spark a
stock market rally? Usually, we tend think of slowing growth as a main reason
for stock prices to head lower. But I can’t help but think, in the case of
China, that the strong growth numbers it’s put up have
convinced investors that
China’s economy is a bubble and that Chinese stocks are
fundamentally unsound.

There have been plenty of
headlines out there from big name hedge fund managers calling for the imminent
crash of
China’s export economy. And in a demand-challenged world,
this message has certainly resonated. Chinese stocks are down across the board.

Shell-shocked investors are
worried enough about
U.S. stocks. Chinese stocks are currently an

What? BP’s not American?

That was an excellent rally yesterday! The S&P 500 broke through important resistance at 1085. For more insight, I will turn to my trusted sidekick, technical analyst for TradeMaster Daily Stock Alerts Jason Cimpl…   


After the weakness on Tuesday, I was beginning to doubt the bulls ability to take the market higher. The group came through yesterday and took back 1085, which needs to become support. Volume was low again, but internals were commendable as buyers out numbered the sellers by 5 to 1. Today the big resistance to watch will be 1103 and 1115. SPX 1103 stopped the market dead in its tracks last week. Stronger lateral resistance exists at 1115 which dates back to December 2009 and is also the 20 DMA and gap resistance.   

Bakken Oil Profits

To call the explosion of the Deepwater Horizon oil rig and the subsequent well damage that’s allowed millions of gallons of oil spill into the Gulf of Mexico a tragedy is an understatement.   


Eleven men died when that rig exploded on April 20th. And now, critical fisheries along the coasts of Louisiana, Alabama and Mississippi are being destroyed. The commercial fishing industry in these states is threatened and a way of life for these fishermen may be coming to an end.   


An oil slick is reportedly nine miles off the coast of Pensacola  


BP itself is under siege, too. The stock is in a virtual freefall as repeated efforts to cap the leak have failed. It could be months before the leak is stopped. Costs to the company could hit $22 billion. And that’s if BP didn’t do anything wrong. 

China Plays Ball

On Tuesday, I discussed in Daily Profit how cooperation between the U.S. and China was critical to helping investors get past the fears of the Euro debt problem, and keep the world focused on growth.   


I don’t think it’s any coincidence that last night, Chinese officials came out and said they were long-term investors in China, just as Treasury Secretary Geithner finished a round of meetings in China.  


This is exactly the type of cooperation I was talking about. China’s massive currency reserve and trade surplus are meaningless if the global economy goes back in the tank. So it’s in China’s interest to support the euro.   

Profiting from the Crisis in Europe

There’s no ignoring the European debt problems today. Real estate loan defaults are crippling a few Spanish banks, and the IMF has advised that Spain’s banking sector needs to consolidate quickly to provide a more solid backstop against defaults.   


If this reminds you of the scramble here in the U.S. to have weak financial institutions like Merrill Lynch and Countrywide be absorbed by stronger companies, it should.  


And we should also recall that while consolidation helped mitigate some of the potential effects of the financial crisis, it wasn’t a smooth road. Even the strong banks eventually required billion in bailout money to keep them afloat

Are the Sellers Done?

So far this year, the S&P 500 has dropped 3% or more in one session 3 different times. The two previous times, it clawed back some of the losses over the following week. We’ll have to wait and see of there is any upside after yesterday’s big drop.   


The S&P 500 is now testing the lows from the “flash crash” on May 6. This is interesting because it was assumed that trading that day was something of a fluke as computer trading programs went haywire. But now that stocks are back to those levels, we must consider that the drop may not have been a fluke.  


The question now is: can stocks find some strength? Or perhaps a better way to ask the question is: are the sellers done?   

The Volatility Genie

I was trolling Bloomberg last night and I came across the following quote:  


“The volatility genie is out of the bottle and it will take some time to put it back…”   


It doesn’t really matter who said it or what they were commenting on. I initially dismissed it as one of those clichéd comments that just takes up space and doesn’t really add anything meaningful to the discussion.   


I mean, “volatility genie”? Come on.   

The Warren Buffett Retirement Plan

Frankly, most individual investors — no matter how smart or dedicated —
never really figure out a winning system.

You see, the secret to
true wealth isn’t putting in more hours at work. Most of us won’t
inherit a fortune. And it’s certainly not buying a lottery ticket and
hoping like millions of others that yours is the one.

The path to
true wealth can be very simple: make wise investment decisions, based
on a sound investment strategy, with a defined purpose in mind.

probably already have a purpose in mind — nice vacation, new car, gift
for someone special, putting a child through college, buying a second
home, early retirement, any of those and more — and that’s great. It
gives you a goal. Now, you just need a strategy.