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Wednesday's "Earnings Beat" Makes This The Perfect "Bad-Market" Tech Stock

In last week’s Private Briefing report Our Experts Show You the Stocks to Pick in a ‘Stock-Picker’s Market’,” Money Map Press Chief Investment Strategist Keith Fitz-Gerald identified SanDisk Corp.(NasdaqGS: SNDK) as one of three stocks to buy in the face of the stock market sell-off.

And now we see why…

  • U.S. Economy

  • Fourth Quarter U.S. GDP Report is All Sizzle and No Steak When the Roman poet Phaedrus cautioned that "things are not always what they seem; the first appearance deceives many," he could easily have been describing the latest report on the U.S. economy.

    According to a report released Friday, U.S. gross domestic product (GDP) expanded at a 5.7% annual rate in the fourth quarter, exceeding most estimates. But many economists are skeptical that such growth is sustainable. In fact, many analysts say the numbers are downright misleading.

    Roughly two thirds of the growth came from businesses restocking inventories. Efforts to rebuild inventories contributed 3.4 percentage points to GDP growth - the most in two decades. But there wasn't a lot of "sell-through." In fact, excluding the change in inventories, final sales increased at a 2.2% annual rate, a signal that the economy remained weak despite strong top-line numbers.

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  • Can Bernanke Tune Out Political Pressure as the FOMC Again Ponders Policy Changes? When U.S. Federal Reserve Chairman Ben S. Bernanke emerges from the central bank's monthly policymaking meeting at around 2:15 p.m. today (Wednesday), it's a near certainty that he'll reaffirm his pledge to keep interest rates "exceptionally low" for an "extended period" of time.

    Bernanke has kept the benchmark Federal Funds rate at a record low range of 0.00%-0.25% since December 2008, and that's not likely to change as a result of today's meeting of the central bank's Federal Open Market Committee (FOMC).

    At some point, however, Bernanke will have to tighten credit and raise interest rates in order to soak up all the excess liquidity and curb inflation in the U.S. economy. But the question remains: When that time comes, will Bernanke have the fortitude to do so?

    There's no simple answer. And for good reason: With the country mired in its worst financial crisis in most Americans' lifetimes, the central bank's decisions now are as political in focus as they are economic. Read More...
  • The High Cost of Greed … Money Morning subscriber Ted Kubichek wrote and asked if one of our experts could comment on the underlying cause of the financial crisis whose fallout will affect the U.S. economy for years. Here's an edited version of that question, as well as the reply by Money Morning's Shah Gilani, an internationally recognized expert on the global credit crisis.

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  • Will Stocks Rebound From Last Week's Beating? Stocks slipped sharply in the past three days as the underlying market weakness we've been highlighting for the past two weeks finally mattered. A number of better-than-expected earnings reports were ignored. Even the successful election of a Republican to one of Massachusetts' two Senate seats, which helped health-care stocks push the market up on Tuesday, wasn't enough.

    Look at it this way: The sellers won a round, after being absolutely bludgeoned since last March.

    One of the key catalysts has been word that Chinese authorities are ordering some banks to curb lending -- another sign that China is tightening monetary policy in an effort to forestall a runaway credit bubble. Or maybe it was the Chinese government's decision to pull James Cameron's fanciful and rebellious "Avatar" movie out of its theatres. It's easy to get caught up in the Chinese growth story and forget how oppressive the communist regime running the show there is; these people crushed students to death with tanks.

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  • Last Week's Sell-Off Leaves U.S. Investors in Unfamiliar Territory Friday's sharp sell-off in U.S. stocks capped a week of heavy losses that has the market in the red for 2010. And that has investors wondering where U.S. stock prices are headed next.

    On Friday, accelerating concerns about U.S. corporate earnings combined with newly emergent worries about China's health hit stock prices hard. A 6% drop in the shares of Aloca Inc. (NYSE: AA) helped send the Dow Jones Industrial Average into a 216.90-point nosedive, a 2.1% decline that had it end the week at 10,172.98. The blue-chip average fell 4.1% for the week, its worst weekly performance since February of 2009.

    The Standard & Poor's 500 Index lost 24.72 points, or 2.2%, on Friday. It closed at 1,091.76 after losing 3.9% for the week. A slew of analyst downgrades on technology stocks on Friday sent the Nasdaq Composite Index down 60.41 points, or 2.7%, on Friday. It closed at 2,205.29, after losing 3.6% for the week.

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  • Intel and JPMorgan Results Boost Fourth Quarter Earnings Season, but Market Swoons Stock market bellwethers Intel Corp. (Nasdaq: INTC) and JPMorgan Chase & Co. (NYSE: JPM) gave earnings season a booster shot Friday when they released fourth-quarter results that exceeded analysts' expectations.

    And even though the market reacted negatively to the news -- suffering its worst losses of the New Year -- their results add positive momentum to an earnings season that is expected to provide an abundance of good news.

    For the first time since the second quarter of 2007, fourth quarter earnings of stocks in the Standard & Poor's 500 Index should be higher than they were the year before. That would break the longest losing streak since S&P began keeping track of operating earnings in 1991.

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  • How to Profit From the "Road Map to Recovery," Regardless of What Lies Ahead Getting both sides of a bear market and recovery right is the biggest test that investors face because it requires doing an about-face on a winning strategy.

    The ideal investor would have sold in October 2007 when stocks were making new all-time highs, then stayed out of all subsequent rallies during the worst bear market in seven decades, and then bought back into the market at its once-unimaginable low after not just the wheels of the economy had fallen off, but seemingly the engine, doors and steering wheel as well.

    Also, the ideal investor didn't just need to recognize those inflection points, but make the most of his observation by exiting in full in October 2007 and re-entering with guns blazing in March 2009. That is even harder. The most common scenario would be to exit partially and enter partially.

    Recognizing that only the most prescient investors will get these inflection points exactly right, I have focused my long-term research since the 2000 bear market on paying as much attention as possible to the message of the ticker tape rather than economics or fundamentals when it comes to these calls.
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  • The Seven Investment Risks to Avoid in 2010 Spurred by its best annual performance since 2003, U.S. stocks stampeded into the New Year, with the Dow Jones Industrial Average, the Nasdaq Composite Index and Standard & Poor's 500 Index posting gains of 1.49%, 1.73% and 1.60%, respectively. And while that's certainly a respectable beginning, investors shouldn't assume it signals that a bull market run its course for the full year.

    Indeed, while Money Morning's outlook for 2010 is generally positive, there are at least seven major risks that could rein in the charging bull - or even release an angry bear into the trading arena. The top risks consist of:

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  • Latest Unemployment Numbers Prove There's No Easy Way Out of a "Jobless Recovery" The unemployment numbers reported by the Labor Department Friday are proof that despite recent optimism about the job market, the economy is still trudging through a jobless recovery. And it doesn't look like the labor picture will improve anytime soon, either.

    Employers unexpectedly shed 85,000 jobs in December, displaying a lack of confidence in the economic recovery and leaving the "official" unemployment rate at 10%.

    However, the real rate of unemployment -- which includes part- time workers who want full-time jobs and people who want work but have simply stopped looking -- rose to 17.3% from 17.2%.

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  • Number of the Day: At 84,000, Private-Sector Job Losses For December Are Less Than Expected Is the U.S. jobs market finally ready to move in the right direction?

    According to a national employment report released yesterday (Wednesday), that appears to be the case.

    The U.S. economy lost an estimated 84,000 private-sector jobs in December, the smallest decline since March 2009, the report said. Also good news: Service providers - the largest component of the U.S. economy - actually added jobs, according to the national employment report, which is published by payroll processer Automatic Data Processing Inc. (Nasdaq: ADP) and consultant Read More...
  • Would You Like to Be My Partner? I'd like to make you a business offer. Seriously. This is a real offer. In fact, you really can't turn me down, as you'll come to understand in a moment.

    Here's the deal. You're going to start a business or expand the one you've got now. It doesn't really matter what you do or what you're going to do. I'll partner with you no matter what business you're in - as long as it's legal. But I can't give you any capital - you have to come up with that on your own. And I won't give you any labor - that's definitely up to you. What I will do, however, is demand that you follow all sorts of rules about what products and services you can offer, how much (and how often) you pay your employees, and where and when you're allowed to operate your business.

    That's my role: to tell you what to do. Read More...
  • U.S. Escalates Trade Dispute With China The United States launched another salvo in a trade dispute with China last week when it imposed new duties on imports of steel pipes, escalating tensions between the two powers.

    The Chinese government quickly fired back, accusing the U.S. of "protectionism."

    The U.S. International Trade Commission (ITC) voted unanimously on December 30 to impose duties between 10.36% and 15.78% on the pipes, which are used mostly by the oil and gas industries. Those new tariffs are designed to negate the subsidies that the U.S. government says China gives its steelmakers. Read More...
  • GDP Revised Lower For Third Quarter, Sets Stage For Slow Growth in 2010 The U.S. economy expanded at a slower rate than expected in the third quarter, but reductions in corporate spending and inventories have set the stage for continued growth of gross domestic product (GDP) in 2010.

    GDP, a broad measure of economic activity, rose at a 2.2% annual rate from July through September, the Commerce Department reported yesterday (Tuesday), compared to a 2.8% gain in its previous estimate.

    The new figure was below the 2.8% median estimate of 73 economists in a Bloomberg News survey, and significantly below the government's initial estimate of 3.5%. The GDP report is the third and final for the quarter.

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  • The Recovery is Picking Up Speed, Setting the Stage for Big Gains in the Next Year Do you hear a rumbling, a honking, the smell of new carpet in the air? If so, it's all a result of the biggest surprise of the past month: the rise of U.S. vehicle sales, which was supposed to have ended with the "Cash for Clunkers" deal over the summer.

    And it's a very positive surprise.

    The U.S. auto industry may be beleaguered, beaten, bruised and battered, but it is still extremely important to this country. If it can get rolling again, shocking the skeptics, then a lot of good things will happen.

    When car sales rise, auto factory production rates rise, causing more car parts to be ordered, more steel and rubber and glass ordered and more advertising purchased. This leads to more people being hired in manufacturing, product planning and marketing, and all ancillary industries. A stronger auto industry will make the U.S. economy start to spin faster on its axis in ways no one is expecting. You cannot overestimate the importance of the improvement of this key industry, and yet I really don't think that investors are really onto it yet.
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  • Investment News Briefs With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.

    Sovereign Fund Attempts to End $7.5 Billion Citi Share Purchase; Credit Suisse to Pay U.S. $536 Million Penalty; Cohen: U.S. Economy to Slow in 2010; Roy Disney Dead at 79; Former TPG, Lazard Employees Sued by SEC for Insider Trading; Galleon Group Founder Indictment Alleges Fraud, Conspiracy; Comcast Launches Online TV Service